The seasonally adjusted September FDI (55.8) decelerated in September, falling to 55.8 from 62.5 in August, “still strong in absolute terms but nonetheless meaningfully lower for the second straight month,” according to R.W. Baird analyst David Manthey.

Just 22% of respondents indicated sales were “better” relative to seasonal expectations vs. 63% in August. This produced a seasonally adjusted sales index of 46.5 (August 74.7), the lowest recorded reading since October 2016.

“Of note, several respondents indicated having just 19 selling days this month was a headwind, potentially skewing overall results more negatively than daily sales growth might have reflected,” Manthey wrote.

Pricing remains higher among a large majority of respondents, with 85% seeing pricing gains y/y vs. 84% in August. The resulting FDI pricing index of 92.6 was essentially unchanged month to month.

A 70% majority of respondents view inventory levels as in line with expectations, while 19% believe customers’ inventories are too low. This compares to 59% in line and 38% too low in August.

The Forward Looking Index declined to 54.7 vs. 63.4 in August, “mainly attributable to a lower employment index and a less bullish 6 month outlook.”

Hiring sentiment was slightly lower in September, with 30% of respondents seeing higher employment levels vs. 38% in August, while 63% saw employment as in line (August 59%). The resulting FDI Employment Index was 61.1 vs. 67.2 last month.

“The overall tone of qualitative commentary was again more cautious this month, with respondents noting a softening in demand in September and some unease regarding 2019,” Manthey writes.

“The tech industry in California has softened,” one respondent commented. “We have had customers request in September a push out on deliveries.”

Survey data pointed to less optimism regarding activity over the next six months, with just 26% of respondents expecting higher activity levels over the next six months and 52% expecting similar activity. For context, the percentage of respondents expecting higher activity had been steadily around ~50% over the past five months.

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