The seasonally adjusted March FDI (66) remained strong and essentially unchanged vs. February. 

“A robust 91% of respondents saw better than seasonally expected sales in March, breaking out even further vs. the ~70% seen consistently over the last three months,” according to R.W. Baird analyst David Manthey. “Price increases from suppliers continue to flow through at an elevated rate/frequency, while delays in importing materials continue to cause headaches for many respondents.” 

Feedback suggests lead times “continue to extend, leaving many distributors unable to fully meet the very strong demand.”

The seasonally adjusted Forward Looking Index was 78.5, setting another new all-time high after last month’s record 73.9 reading. “Increasingly thin respondent and customer inventory levels amid imported materials constraints and extended lead times, along with a more bullish six-month outlook continue to power upward momentum in the FLI.” 

With the FLI well above 50, customer and respondent inventories at very low levels, and respondents continuing to forecast favorable six-month outlooks, “we believe the FDI should see additional expansionary readings ahead, implying continued improvement in the months ahead.” 

During March, the employment index softened to 65.6 reading vs. 67.1 in February. About 40% of respondents saw employment levels as above seasonal expectations in March compared to 43% in February. 

Supply chain constraints and pricing remain areas of focus, Manthey found. 

Nearly every comment touched on supply chain constraints as importing material into the ports remains highly challenging amid congestion and container shortages. 

“The marketplace is in chaos,” one respondent stated. “Supplies are low, demand is high. Lead times are extending due to material cost pressure and demand pull.” 

Another participant said: “Import delays continue to be extended and domestic manufacturer lead times going out as well. Price increases are out of control and coming in with every repeat order.” 

This has translated into significant supplier price increases. 

“Increased costs continue to pressure margins. Customers fighting the increases even though they are aware of the market conditions. Delays in shipments from overseas causing lots of busy work.”s

“We have seen an average [price] increase of 7% which lowers our profitability on the contract customers. Once the anniversary date of the contract arrives we will adjust customer costs to offset these increases.”

The FDI is a monthly survey of North American fastener distributors conducted by the FCH Sourcing Network, the National Fastener Distributors Association and Baird. Web: fdisurvey.com