The seasonally adjusted Fastener Distributor Index increased “slightly” to 60.8 in January, continuing to gain ground for the second straight month, according to R.W. Baird analyst David Manthey.

“In the January survey, a full 82% of respondents indicated sales were ‘better’ relative to seasonal expectations – the highest percentage recorded since FDI inception,” Manthey writes.

This produced a seasonally adjusted sales index of 72.7, up vs. 68.4 in December and suggesting selling conditions remain very strong overall.

“Pricing was again a solid tailwind as 73% of distributors saw higher prices y/y (up vs. 66% in December) amid strong end market demand,” Manthey noted. This resulted in an FDI pricing index of 86.4 (vs. last month’s 82.9 reading), which was above the 2017 average of 75.0. As it relates to customer

A majority of respondents continue to view customer inventory levels as “in line with expectations (64% of responses), while 33% believe inventory levels are too low.”

The FDI Forward-Looking Indicator (FLI) accelerated again, coming in at 64.7 in January vs. December’s 59.6.

“Gains were again driven by a more bullish 6-month outlook and improved hiring sentiment.”

Manthey added that market conditions still appear likely to remain in growth mode in the coming months.

Hiring sentiment was again slightly higher this month among survey respondents, with 33% reporting higher employment levels in January relative to seasonal expectations vs. 20% in December, while 67% saw employment as in line with seasonal expectations. The resulting FDI Employment Index was 66.7, up vs. December’s 58.6 reading.

“December commentary was a bit more mixed but respondents were largely expecting strong January trends,” Manthey noted. “This dynamic played out as expected with the FDI accelerating and respondent commentary skewing positively.”

One distributor characterized this month as the “best January ever!” Another respondent, however, expressed concerns regarding pricing pressure in the channel coming from large customers.

Manthey said quantitative survey data “continues to point to a mostly positive outlook with 76% of respondents expecting higher activity levels over the next six months (also an FDI record and improved vs. 60% in December), along with another 21% who expect 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