It's spring here in the Northeast, and the gardeners in our midst are getting busy. One colleague tells me his spinach, peas, and onions are well under way. He's hopeful for a robust crop.
Likewise, the economy, after several difficult years, is showing signs of fertile growth. And several of those signs are in sectors we watch closely.
A pair of recent reports indicate that the material handling industry is doing quite well. And the industrial real estate business appears ready for a strong rebound.
First, the Conveyor Equipment Manufacturers Association (CEMA) reported at its annual meeting in March that units shipped last year grew by 28 percent over 2010 levels. Daniel Fannin, chair of CEMA's statistics committee, said the group projects growth will reach about 10 percent this year.
Then, in April, in its quarterly Material Handling Equipment Manufacturing Forecast, the Material Handling Industry of America reported that equipment orders rose by more than 16 percent last year and forecast growth of 8 to 9 percent this year and 12 percent next year.
On the real estate side, growing occupancy rates and a shortage of modern DC space may combine to spur investment in new construction. At least, that's what I took away from comments made by Walter C. Rakowich, co-chief executive of Prologis Inc., during his keynote address at the annual International Warehouse Logistics Association conference in March. Rakowich said the industry would need to add as much as 75 million square feet of new distribution space just to replace obsolescent facilities. And with each new DC comes the need for material handling equipment.
That's all heartening news not only for material handling equipment makers, but also for the economy as a whole. Businesses invest in material handling equipment when they anticipate growing demand for their products and need to have the wherewithal to move them to market.
I also suspect that part of the growth is the result of pent-up demand, as businesses withheld investment during much of the last four-plus years. But if you look at material handling investment as a leading indicator, this could be a sign that we're on the cusp of seeing more hiring, more spending, and a stronger economy.
I don't want to make too much of a couple of numbers from industries that, while important, are not the big drivers of the economy. And other factors, like rising petroleum prices, could still drag overall growth down. But it is nice to find some cause for optimism after so much gloom, and it's even better when it's in our own backyard.
