“The seasonally adjusted August FDI (62.5) decelerated vs. July’s 69.2 reading, still strong in absolute terms but nonetheless meaningfully lower vs. last month’s very bullish reading,” writes R.W. Baird analyst David Manthey.

In the August survey, 63% of respondents indicated sales were “better” vs. 68% in July. This produced a seasonally adjusted sales index of 74.7 (July was a record at 89.6). Pricing was higher among a large majority of respondents, with 84% seeing pricing gains y/y vs. 79% in July.

“The resulting FDI pricing index of 92.2 strengthened m/m and modestly exceeded the previous record high set in June (90.7),” according to Manthey.

Regarding customer inventories, a majority of respondents view inventory levels as in line with expectations (59% of responses), while 38% believe customers’ inventories are too low. This compares to 74% in line and 24% too low in July.

The seasonally adjusted Forward Looking Index “came up moderately m/m, registering 63.4 vs. 60.1 in July, with three of the four forward-looking inputs in the FDI improving. More broadly, a 63.4 reading suggests market conditions are likely to remain favorable, likely pointing to FDI readings similar to August in the near term.”

Hiring sentiment was relatively unchanged this month among survey respondents, with 38% of respondents seeing higher employment levels in August vs. 35% in July, while 59% saw employment as in line (unchanged vs. July). The resulting FDI Employment Index was 67.2 vs. 64.7 last month.

“The overall tone of qualitative commentary was again more cautious this month, with respondents expressing some tariff-related uncertainty, and the potential for a loss of momentum.”

For example, one respondent commented, “The lack of a consistent trade policy is a negative.”

Inventory was again in focus this month as well: “We have noticed that some of the Master Distributors are short on inventory that they normally stock in a single location. We are having to get it from other warehouse. Not picking on any one Master Distributor, we are seeing this with several different ones.”

About 47% of respondents expect higher activity levels over the next six months and 41% expecting similar activity, with the percentage of respondents expecting higher activity remaining steady 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