9/6/2016 1:45:00 PM
HEADLINES
FDI Drops Amid “Deteriorating” Conditions
July’s seasonally adjusted Fastener Distributor Index reading (45.9) proved materially lower, breaking a run of three consecutive +50 readings.
“We believe the sequential decline is largely consistent with mixed recent industry anecdotes, to include extended customer shutdowns for select manufacturers, and ongoing industry pricing pressure,” writes independent analyst Charles Redding.
July Reading Drops
The seasonally adjusted July FDI (45.9) plunged materially versus the May (50.1) and June (50.6) readings.
“For July, a paltry 14% of respondents cited stronger sales versus the June period (28% last month),” writes Redding. “Fewer monthly sales days likely impacted results for most participants, although the degree to which conditions deteriorated was surprising.”
Regarding customer inventories, 16% of participants viewed current levels as “too high”. During a better growth period (2013-2014) this metric averaged 4%.
Manufacturing Employment Outlook Mixed
“Despite a stronger headline US jobs report for July (+255K adds vs. +180K consensus; unemployment 4.9%), we believe the outlook for hiring remains mixed for many domestic manufacturers (US BLS).
About 89% of respondents cited unchanged (or weaker) hiring conditions versus the prior month. This metric averaged 87% over the prior six-month period.
Recent Sentiment Negative
One participant noted,“July results were very disappointing.”
Another called out the weaker pricing environment, suggesting, “Sagging durable goods and transportation equipment orders will continue to apply price pressure….margin pressures (are still being) felt from low commodity prices 6-12 months ago.”
The FDI is a monthly survey of NorAm fastener distributors, conducted with the FCH Sourcing Network and the National Fastener Distributors Association.
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