The seasonally adjusted Fastener Distributor Index rose “modestly” to 57.6 in December, reversing the deceleration seen in November, according to R.W. Baird analyst David Manthey.

“In the December survey, 43% of respondents indicated sales were ‘better’ relative to seasonal expectations – down slightly vs. 50% in November but nevertheless still much improved vs. average 2016 levels (31%),” Manthey writes. “Relative to historical seasonal readings in the month of December, this month’s seasonally adjusted sales index of 68.4 suggests selling conditions remain very strong overall.”

Pricing was again “a solid tailwind” as 66% of distributors saw higher prices (up slightly vs. 63% in November) amid generally improving end markets. This produced an FDI pricing index of 82.9, up vs. last month’s 78.1 reading and above the 2017 average of 75.0.

About 63% of respondents view customer inventory levels as in line with expectations during December, while 31% see inventory levels as too low. In November, 75% said customer inventory levels were in line with expectations, while 25% said they were too low.

The FDI Forward-Looking Indicator accelerated following two straight months of deceleration, registering a seasonally-adjusted 59.6 in December vs. last month’s 57.7. Gains were primarily driven by a slightly more bullish 6-month outlook and improved hiring sentiment.

“Given solidly expansionary FDI and Forward-Looking Indicator readings, market conditions still appear likely to remain in growth mode in the coming months,” Manthey writes.

Hiring sentiment was slightly higher, with 20% of respondents reporting higher employment levels in December relative to seasonal expectations vs. 13% in November, while 77% saw employment as in line with seasonal expectations (November 81%). This produced an FDI Employment Index of 58.6, up vs. November’s 53.1 reading. 

However, December sentiment was mixed amid normal seasonal slowness around the holidays, while January is generally expected to be a good month based on strong backlogs.

“The limited number of production hours in December made December an average month, but if backlog is any indication of the future, January 2018 should join most of 2017 in breaking records,” stated one respondent.

Quantitative survey data also points to a mostly positive outlook, with 60% of respondents expecting higher activity levels over the next six months (up vs. 47% in November), and another 37% expecting similar activity.

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