The May seasonally adjusted Fastener Distributor Index (FDI) was essentially unchanged in May vs. last month, remaining in modest growth territory at 52.7.

The sales index declined, with participants attributing lower revenues to “difficulties getting overseas containers/materials into ports amid further slowdowns from China,” according to R.W. Baird analyst David Manthey.

Pricing remained stable at a high level, supported by rising container/freight costs and ongoing raw material cost pressures that “continue to drive outsized fastener pricing.”

“Overall, growth and market conditions remained positive but slowing relative to earlier this year,” Manthey writes.

The Forward Looking Index continues to signal growth, edging up to 55.4.

“Relative to April, a stronger employment reading was offset by a weaker six-month outlook and higher respondent inventory levels,” according to Manthey.

Respondents were divided between those expecting higher activity levels (26%) and those expecting lower (23%) over the next six months.

“This is the first time the outlook has been this divided since just prior to the onset of the COVID-19 driven recession (December 2019),” Manthey writes. “That said, with multiple participants noting backlogs of orders and delays fulfilling orders due to port congestion, we still think the FDI is likely to remain in growth mode near term.”

The employment index came in at 62.9 after dipping to 53.1 last month.

“No comments were registered this month on labor shortages, perhaps implying some improvement in this area when coupled with the quantitative improvement seen in the index.”

Demand remains strong despite headwinds. Overall, commentary this month focused on continued growth and strong demand despite numerous logistics constraints.

As one participant said, “Incoming sales remain very strong, although they did tail off a bit from April. Lead times are starting to stretch out as we work to catch up on the record-breaking sales of the previous few months. At the halfway point of our fiscal year, we have already surpassed last year’s total sales. Now the challenge is to get material and tooling in house in a timely manner in order to produce the parts on time for our customers.”

“Our sales numbers are still performing at historical levels but thinking the industry will see slower growth the remainder of the year,” another participant said.

Issues at the port appear to be increasing ahead of the busy Summer peak (expected to be in mid-June), with most attributing this to lockdowns in China.

“[We’re] still having logistics issues getting containers in from overseas in a timely manner,” one respondent commented. “One delay after another! Lockdown in China has also created major delays in getting material shipped!”

The rising cost associated with imports has not had a uniformly negative effect, however.

“As a domestic manufacturer of fasteners, we hear that our costing is closer than ever before to import costing.”

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