Economic Growth Expected to Hit 3% by Year End

The Material Handling Industry expects consumers to drive economic expansion for the rest of the year, and paints an upbeat picture for 2014.

Although the U.S. economy faces a major challenge in the federal spending sequester, the latest Material Handling Equipment Manufacturing (MHEM) forecast of the Material Handling Industry (MHI) states that the private economy’s fundamentals will remain solid. The forecast’s author, Hal Vandiver, MHI's executive consultant, expects growth to accelerate in the second half of 2013, reaching a 3% pace by year-end.

“So far, the sequester has had little measurable impact on employment,” Vandiver states. “The average monthly gain in payroll jobs over the past three months has been just over 200,000, roughly the same pace as the prior three months. Hours worked and job counts in the public sector could be affected in the coming months, however.”

As the current U.S. economic expansion shifts from Cap-Ex driven to Consumer-led, Vandiver anticipates modest, positive MHEM growth for 2013. Housing, Auto rebounds and expansion in Industrial, Warehouse and Commercial Buildings (over 69% 2014 - 2018) will contribute substantially to improved MHEM growth for 2014 and beyond, he believes.

Here are the numbers behind that forecast:

·       MHEM New Orders grew 7.2% in 2012. The outlook for 2013 is for growth of 5.0 to 6.0% and 10.0% or better for 2014; there remains some downside risk in the first half of 2013.

·        MHEM Shipments grew 9.8% in 2012. Shipments will grow about 3.5% in 2013, and 9.1% in 2014.

·       MHEM Domestic Demand grew 10.9% in 2012. Domestic Demand (Shipments plus Imports less Exports) will mirror Shipment growth in 2013 at 3.4% and just over 9.5% in 2014.

·       MHEM Trade growth slowed by more than 50.0% in 2012 reflecting reduced US demand and serious problems in foreign markets. Import growth in 2012 was 17.9%, down from 37.7% in 2011. Export growth was 11.2% in 2012, down from 26.2% in 2011.

·       MHEM Imports and Exports are expected to slow dramatically in 2013 and rebound modestly beginning mid-2014.

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