Source: Robert W. Baird & Co., FCH Sourcing Network, company reports

The June Fastener Distributor Index “accelerated strongly” to 62.3 from May’s 56.6 reading, a departure from recent trends (four straight months of deceleration).

“In the June survey, 59% of respondents indicated sales were “better” relative to seasonal expectations vs. 54% in May,” writes R.W. Baird analyst David Manthey.

This produced a seasonally adjusted sales index of 74.2.

“Pricing gains were again noted by a large majority of respondents, with 81% seeing higher prices y/y (and 67% m/m) vs. 75% in May.”

The resulting FDI pricing index of 90.7 represents a new high for the index.

A majority of respondents (67%) continue to view customer inventory levels as in line with expectations, while 33% believe customer inventories are too low.

The Foward Looking Index ticked up, registering 62 in June vs. 58.8 in May, “mainly attributable to an improved employment index, which was partially offset by a modestly lower six month outlook,” according to Manthey.

“Given solidly-expansionary FDI and FLI readings, we believe market conditions are likely to remain in growth mode (albeit potentially moderating growth) in the coming months.”

Hiring sentiment improved, with 41% of respondents reporting higher employment levels vs. 32% in May, while 56% saw employment as in line. The resulting FDI Employment Index was 68.5, up from May’s 60.7 reading. 

Steel tariffs and global trade remain areas of concern among several respondents.

“We’ve been told that wire coming into the states from Canada has a 25% tariff on it,” one distributor stated. “That’s increased our cost about 7%- 8% on the finished good. I don’t see this ending any time soon.”

Survey data points to “mostly stable momentum” expected through 2018, with 44% of respondents expecting higher activity levels over the next six months and 41% expecting similar activity, although the percentage of respondents expecting higher activity has moderated every month YTD since the 76% recorded in January.

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