The seasonally adjusted September Fastener Distributor Index (54.2) moderated from last month’s 55.4, reflecting “reflecting lower sales activity” amid supply chain and labor market difficulties, according to R.W. Baird analyst David Manthey. 

Pricing settled down as the proportion of respondents reporting higher pricing m/m decreased (71% vs. 81% last month), which drove a contraction in the FDI Pricing Index (83.9 vs. 90.4 last month).

“Commentary indicated stainless steel raw material availability is a drag, along with staffing shortages and lengthy deliveries,” Manthey writes. “Uncertainty around the availability and timing of receiving products, particularly imported products, was a common theme among survey participants again this month.”

The seasonally adjusted Forward Looking Index contracted to 69.5 due to a slight uptick in customer inventory levels (bearish for potential future restocking/demand), as well as a softer six-month outlook. Only 42% of respondents now expect activity levels to be higher six months from now vs. today compared to 58% in August. That said, product shortages in the face of continued strong demand could simply lengthen out the cycle, implying the FDI could remain in growth mode for much longer. 

The FDI employment index rose to 54.8 vs. 53.8 last month, driven by an uptick in the percentage of respondents indicating employment is above seasonal expectations (35% vs. just 19% in August). 

“We continue to hear the job market remains extremely tight and filling open frontline positions (warehouse workers, drivers, etc.) is especially challenging, implying the employment index could remain at depressed levels for some time to come,” Manthey writes.

Once again, respondent commentary focused in on supply chain. Said one respondent, 

“In my 45 years, I have never seen the supply chain this screwed up and pricing this out of control,” one respondent commented.

“We could do more if we had products coming in… right now if we are finding parts, we are buying it just to have it. UGH,” another respondent noted.

Raw material shortages continue to pose a significant challenge, as do labor shortages. 

“Stainless steel raw material continues to be an issue; shortages and very long deliveries are hampering production,” according to one respondent. “Also staffing shortages continue to slow and hamper production as positions remain unfilled for lack of candidates.” 

Several survey participants indicate they see the supply chain havoc lingering well into next year.

“We are having issues finding good outside sales, inside sales and warehouse help to fill open positions. Even though sales slowed just a bit in September we remain bullish on the near future. China shutdowns are coming and therefore we can assume the shortages will continue through 2022Q3.”

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