A report on material handling business dynamics showed a “significant improvement” in May from the weakness reported in April, according to a monthly measurement from Prestige Economics.
That report came from the forecasting firm’s “MHI Business Activity Index,” which found that business activity, inventories, and future new orders remained in expansion territory, while new orders and unfilled orders rebounded sharply from contraction into expansion. Capacity utilization, shipments, and exports contracted, although shipments improved from April.
More specifically, the most encouraging developments in May were the substantial rebounds in the categories of new orders and unfilled orders. New orders rose from 29% in April to 68% in May, while unfilled orders increased from 43% to 63%. According to Prestige Economics, these improvements suggest that the weakness reported in April was likely an outlier rather than the beginning of a sustained downturn.
Future new orders remained exceptionally strong at 84%, indicating that respondents continue to expect healthy demand growth over the next twelve months, despite ongoing economic and geopolitical uncertainty.
However, that uncertainty continues to weigh down sentiment, as shown by the measurement that May qualitative responses were generally negative despite the improved data. Respondents cited their top concerns as: tariffs, trade uncertainty, the war with Iran, higher fuel costs, and commodity price volatility.
Still, hiring conditions remained favorable in May, with 74% of respondents reporting easier hiring conditions. Although this was down from 81% in April, it remained well above the breakeven level of 50, suggesting labor availability continues to improve and supporting stronger candidate quality in hiring pipelines.
