My opening statement at our AGM in May remarked on how refreshing it was to look back on a positive start to this year in the period January to March. Furthermore the short-term outlook was also favourable in the BITA 2014 Economic Forecast we distributed to BITA members attending the AGM.
We were told that there were clear signs of life in the UK economy and that we could expect counterbalance orders to increase by 13.2% to 15,369 and warehouse orders increasing by 5.7% to 13,798 during 2014.
As an annual total of 29,167 it compared very favourably with previous forecasts of only 27,750 orders in 2014 (based on counterbalance orders rising only 4.2% to 14,386 and warehouse increasing only 3.8% to
13,364). The grounds for our optimism were strong indications of growing underlying macroeconomic strength, based on improving exports and signs of stronger business investment. An improving global trade cycle
implied benefits for manufacturers (23% of whose output is exported), while at home strong growth in the housing sector suggested an uptick in business for the building materials sector. More on that later.
The good news is that, so far, we appear to be exceeding May’s expectations. Based on actual orders during the second quarter of 2014 (derived from BITA’s unique, member-only database of industrial truck sales statistics), there’s been a 6% increase in orders from Q1 2014 to Q2 2014, yielding a total of 15,261 orders for the first half of 2014. Based particularly on strong warehouse sales, that’s a 15% increase from the 13,227 orders registered between January and June in 2013. If you extrapolate the first-half figures to a whole-year view, on a pro-rata basis (with all the usual caveats) we could be looking at a 2014 total of over 30,500 orders. That would be 5% higher than the 2014 forecast. Good news however you look at it.
However, while there’s every indication that we’re well into recovery, economists were baffled to find that industrial production actually fell 0.7% between April and May according to the Office of National Statistics (ONS). Manufacturing’s 1.3% fall in particular defied City predictions there’d be a 0.4% rise.
The ONS also estimated that output in the construction industry during May 2014 had fallen by 1.1% compared with April 2014, after increasing by 1.2% in April. Overall there was still an increase of 3.5% compared with May 2013, with new housing the largest contributor to the year-on-year increase (as foreseen by the Economic Forecast). The ONS also noted that “there were notable year-on-year falls in infrastructure, public other new work and private commercial.”
It would be an oversimplification to link this weakness in construction to the 14% fall in counterbalance orders noted between Q1 and Q2 2014. As the Economic Forecast noted, we’d already experienced a double-digit rise in Q1 2014, which itself probably reflected weak counterbalance orders in Q1 2013 rather than a strong upward activity trend. Hence it was expected that strong year-on-year growth in orders would not persist.
On a more positive note, warehouse orders enjoyed a 31% uptick from 3,363 in Q1 to 4,389 in Q2, fulfilling the Forecast’s expectation that continuing e-commerce development would have a positive effect on both transport and distribution sectors. Is it safe to assume the worst of the weather is now behind us? We’ve certainly seen off the black clouds of late 2009, when moving annualised orders dropped below 18,000. With our annual estimate now looking very good for 30,000 this year, we’re well on our way back to the 32,000 order level highpoint last experienced in 2007. Perhaps it’s too early to crack open the bubbly just yet... but definitely worth putting it in the fridge!