The seasonally adjusted Fastener Distributor Index showed improvement for the second consecutive month, rising to 53 in February.  The seasonally adjusted sales index accelerated to 54.9.

“Of note, the improvement in the sales index was driven mainly by the seasonal adjustment factor, as the percentage of respondents seeing better-than-expected sales actually decreased vs. last month, although this is not usual given February is normally a seasonally weaker month,” R.W. Baird analyst David Manthey wrote.

Pricing remained stable for a large majority of respondents.

The Forward Looking Index decreased to 48.9 (January 50.9) as a lower employment index and higher inventory levels among respondents weighed on the index.

“January’s FLI represented the first expansionary reading since April 2019; with Coronavirus supply chain concerns seemingly mounting, the FLI returned below 50, implying additional moderation in growth could be ahead,” Manthey wrote.

“Potential early supply chain impacts from the Coronavirus most noticeably manifested in the form of a significant uptick in the percentage of respondents seeing slower supplier deliveries compared to last month.”

Hiring sentiment turned “slightly more pessimistic,” as only 18% of respondents characterized the pace of hiring as having picked up vs. January (compared to 27% last month), while another 61% indicated the pace was stable sequentially. 

The overall tone of comments was uneven, with one respondent attributing weaker-than-expected February results and expected lower activity six months from now to Coronavirus impacts.

Another respondent took a more bullish view on expectations for the second half of the year.

“Most economic sources expect a pickup in the 2nd half which [explains] the future activity optimism.”

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