The seasonally adjusted September FDI (56) was “flattish” from August to September, according to R.W. Baird analyst David Manthey.

“Better sales trends were offset by a weaker employment reading,” Manthey writes.

Prior to September, the FDI increased for two consecutive months.

“From a sales perspective, 35% of respondents experienced sales above seasonal expectations, similar m/m (August 41%) but well below average 2018 levels (55%). Pricing was stable sequentially for a large majority of respondents,” Manthey writes.

The September Forward Looking Index dropped “meaningfully.”

“After two consecutive months of modest improvement, the seasonally adjusted FLI reversed course this month, dropping to 44.0 (48.0 last month), which is the lowest reading in the FLI since January 2016 and the eighth sub-50 reading in nine months YTD,” Manthey writes.

All four components of the FLI (employment index, respondent inventories, customer inventories, and six- month outlook) turned “more bearish m/m.”

Hiring sentiment was a “bit weaker vs. August, as an uptick was registered in the percentage of respondents with lower employment levels than seasonal expectations,” according to Manthey.

Respondent commentary was mixed.

“Nothing in the economic sources used in the industry that indicate a change to the slower growth rate until 2nd half 2020,” one respondent commented.

Another commented on destocking occurring at some master importer branches.

“We are seeing some of the master importer distributors not stocking as much at one location. While they may have it, we are always having to bring in parts from their various branches, adding to the COGS with additional freight.”

The six-month outlook deteriorated m/m, with 45% of respondents now expecting lower activity six months from now (August 32%), 32% expecting similar activity (August 41%), and 23% expecting higher activity (August 26%).

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