The Fastener Distributor Index for March declined to 59.5 from 60.4 in February but remained “well in expansionary territory overall.”

“Strong selling conditions continued in March with the seasonally-adjusted sales index coming in at 70.1, down vs. February’s very strong 74.2 reading,” according to R.W. Baird analyst David Manthey.

In the March survey, 64% of respondents indicated sales were “better” relative to seasonal expectations, producing a sales index of 70.1, down from 74.2 in  February.

“Pricing was again a tailwind for a majority of respondents (71% saw higher prices y/y) amid strong end-market demand and widespread New Year supplier price increases,” Manthey stated.

This resulted in an FDI pricing index of 85.7 (vs. February’s 78.4 reading) – “solidly above the 2017 average of 75.”

Several respondents commented on continued inflationary pressures in the channel, with steel tariffs seen as likely to lead to additional supplier price increases over the near to medium-term.

A 64% majority of respondents continue to view customer inventory levels as in line with expectations, while 32% believe customers’ inventories are too low, and another 4% see inventory levels as too high.

“Hiring sentiment was essentially unchanged this month among survey respondents. 29% of respondents saw higher employment levels in March relative to seasonal expectations vs. 27% in February, while another 68% saw employment as in line (February 70%).”

The resulting FDI Employment Index was flat at 62.5.

“Commentary was a bit more mixed this month as positive commentary on current demand was balanced by some respondents expressing concerns over the Trump Administration’s steel tariffs and implications for pricing/margins,” according to Manthey.

One distributor commented: “We are seeing continuing inflation on purchased product. The tariffs put in place by the Trump administration will give suppliers another reason/excuse to raise prices. It is very difficult for us to pass on cost increases.”

“We continue to see impacts from steel tariffs as likely to be net neutral to slight positively, as most distributors have historically been able to pass on, and potentially even exceed, price increases from suppliers, while higher domestic activity levels could also be a minor positive,” Manthey concluded.

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