Material handling data from the industry group MHI reflected expansions in November for business activity, capacity utilization, new orders, shipments, unfilled orders, and future new orders. As two weak data points, inventories and exports contracted in November. Fortunately, interest rates have started falling and are likely to fall further through the end of 2026, which is likely to support material handling, manufacturing activity, and economic growth.
Material Handling Industry Data Hint At Future Growth
U.S. industrial and manufacturing economic data have been mixed recently. Durable goods orders expanded modestly in October, while the ISM manufacturing index contracted in November for an eighth consecutive month.
Recent material handling data has also been mixed, although it improved in the December 3 release of the November 2024 MHI Business Activity Index by Prestige Economics — known in shorthand as the MHI BAI.
The material handling industry is comprised of manufacturers, technology providers, and other suppliers who provide the hardware and software to move goods through the U.S. and global supply chains. Data in the MHI BAI comes from leading executive members of MHI, which is the largest material handling, logistics, and supply chain association in the United States.
In November, data collected from MHI executives reflected more expansions across categories than in most MHI BAI reports. There were monthly expansions in business activity, capacity utilization, new orders, shipments, unfilled orders, and future new orders. Meanwhile, there were only contractions in inventories and exports.
The November MHI BAI showed significant improvements from recent reports, including the mixed September MHI BAI.
In making predictions about the future of the U.S. economy, this data should be watched closely. After all, improvements in material handling could imply that aggregate economic demand is improving. Recent reports have shown solid expansions for new orders, shipments, and future new orders. If those series remain positive, the overall outlook for U.S. manufacturing, material handling, and Gross Domestic Product are also likely to be positive.
Material Handling Shipments Convey Growth
In November, MHI BAI new orders and shipments expanded. Series readings above 50 indicate that a majority of the respondents reported increased monthly activity, while readings below 50 indicate a majority of respondents noted decreased activity.
Shipments have been consistently expanding over the past few years. However, MHI BAI new orders have been weak over the past two years despite strength in November.
The ongoing strength in shipments for material handling companies against a backdrop of weak new orders reflects that companies in the industry have been burning off backlogs and WIP inventories left over from the COVID-19 pandemic.
Digging deeper into the data, 65% of respondents reported November monthly expansions in new orders, and 55% reported expansions in shipments. New orders have been mixed over the past year, reflecting expansions in 13 of the past 24 months. Meanwhile, shipments have contracted only six times in the past 38 months.
Unfilled orders expanded in November, as 60% of respondents reported monthly expansions. However, unfilled orders have only expanded eight times in the past 29 months.
Inventories contracted in November, as only 27% of respondents noted monthly expansions, but 73% noted contractions. This was the fourteenth consecutive monthly contraction in inventories, which have expanded just twice in the past 24 months.
The ongoing relative strength in shipments compared to new orders, unfilled orders, and inventories appears to indicate that companies have been burning off their backlogs and running down WIP inventories.
Material Handling Future New Orders Convey Strength
MHI BAI future new orders have also been strong and were at 95% in November. This percentage shows that almost all respondents expect future new orders will be higher in 12 months. The November three-month average for the future new orders series accelerated to 95%, although the six-month average decelerated to 92%. Both of those averages are exceptionally high.
Fortunately, interest rates have started falling and are likely to fall further through the end of 2026, according to recent Fed member forecasts. A drop in U.S. interest rates and a likely accompanying drop in the dollar are likely to support material handling and manufacturing.
With high future new orders expectations along with numerous expanding current series, the outlook for material handling and supply chain is positive.
What do you think of recent U.S. manufacturing and material handling data?
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