The seasonally-adjusted August FDI (55.9) increased for the second consecutive month (July 52.2), according to R.W. Baird analyst David Manthey.

“Better sales trends and a slight improvement in the employment index were the main contributors of the improvement,” Manthey writes.

From a sales perspective, 41% of respondents experienced sales above seasonal expectations, “much improved m/m (July 18%) but still well below average 2018 levels (55%).” Pricing was stable sequentially for a large majority of respondents.

The Forward Looking Index continued to recover (48.0 vs. 44.9 last month), but was still the seventh sub-50 reading in the first eight months of 2019.

“Of the FLI’s components (employment index, respondent inventories, customer inventories, and six-month outlook), all but customer inventories turned more bullish m/m,” Manthey writes.

The six-month outlook also “nicely improved” after last month’s reading came in at the second lowest level in FDI survey history, with 26% of respondents expecting higher activity (July 21%), 41% expecting similar activity (July 32%), and 32% expecting lower activity (July 46%).

Hiring sentiment was stable vs. July “as hiring was again in line with / to above seasonal expectations for nearly all fastener distributors, consistent with the pattern over the last six months.”

However, commentary remained cautious in August. One respondent summarized the current environment and outlook by saying: “Slower growth was already being forecast for latter half of the year. The trade war has further stymied growth due to all the uncertainty it has created.”

Echoing the theme of a broader slowdown, another participant commented that “Slowdown is starting to rear its ugly head. We are starting to get push outs on deliveries as well, for inventory already in stock.”

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