1/12/2016 2:58:00 PM
NEWS BRIEFS
FDI: Cautious Despite Sales Gains
The BB&TCM Fastener Distributor Index (FDI) found that a “seasonally adjusted headline reading of 50.8 for December implies marginal sequential expansion over a notably weak November.”
“Despite the positive movement, we note that just 35% of survey respondents cited improving sales during the period, and less than one-half expect stronger conditions six months from now.
“Our outlook for fastener distributors is notably cautious, although we will watch closely for additional signs of fundamental stabilization.”
Although sales improved, industry anecdotes remain largely negative. “While we view the sequential
improvement as a nascent positive, overwhelming anecdotal evidence points to continued systemic weakness within domestic manufacturing.
“Of the items measured (sales, employment, delivery times, inventories, customer inventories), we believe weaker top-line sentiment remains the most directionally accurate indicator in the Index.”
Only 35% of respondents reported sequential improvement in sales for December. One participant noted: “This was our weakest month in terms of gross revenue in the past 10 years- we set a new record low, even lower than 2009.”
Overall, the majority of fastener distributors continue to see material sales pressure across many diverse end markets.
The employment component (48.8) ticked slightly lower in December, as 90% of participants noted unchanged or reduced hiring (seasonally adjusted) versus the preceding month.
The FDI noted pricing is still tepid. Point-of-sale pricing for December was unchanged versus November for 80% of survey participants (15% lower).
“We believe the overall environment for price increases remains notably soft given material demand pressure (declining commodity prices, forex, weaker industrial production) and minimal inflation.”
The six-month outlook remains mixed, the FDI found.
“Overall sentiment among FDI participants continues to reflect ongoing weakness within the domestic economy. We believe lower energy spending is at the root of weaker sales, with currency woes further compounding the slowdown. “Recent conversations with private industry contacts suggest continued pressure on manufacturing in early FY’16, and less than one-half of FDI survey participants expect materially improved activity six-months from now.” Web: fdisurvey.com
The BB&TCM FDI is a monthly survey of NorAm fastener distributors conducted by BB&T Capital Markets, the FCH Sourcing Network and the National Fastener Distributors Association.
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