The seasonally adjusted April Fastener Distributor Index declined to 52.6 from 57.2 in March, driven by a decline in the sales index from a general market slowdown, limited material availability for specialty fasteners, lower “panic buying” and Spring Break-related softness. 

“Pricing continues to march higher – particularly on stainless steel – as evidenced by further improvement in the year-to-year pricing index,” according to R.W. Baird analyst David Manthey. “Overall, growth/market conditions remain nicely positive but slowing relative to recent months.”

The seasonally adjusted Forward Looking Index dropped to 55.1 from 65.4 the previous month, hurt by a weaker employment reading and lower six-month outlook. While April respondents were evenly divided between those expecting higher activity levels (41%) and those expecting similar activity (41%) over the next six months, the portion of participants expecting lower activity more than doubled to 19% in April. 

“Overall, with demand still in a healthy place and supply chain challenges leading to very extended backlogs, we believe the FDI should remain in growth mode ahead,” Manthey writes.

The FDI employment index fell to 53.1 vs. 62.1 the previous month.

“March seemingly had participants feeling more optimistic about employment levels with a recent pickup in the pace of hiring for respondents, but April saw a return to more normalized staffing levels/hiring which put some downward pressure on the index,” according to Manthey.

The most common theme in April was slowing growth. 

One respondent said they were “seeing some market slowing, however other parts of our business are still growing.” 

“Business is starting to taper, panic buying is over and product is [slowly] arriving,” another respondent noted. “However, [there are] many concerns over the upcoming Longshoremen workers contracts discussions.” 

One participant attributed this slowness to vacation/spring break. 

“Although we were above goal this month, we had a two-week slowdown coinciding with spring break…material for specialty fasteners continues to be the biggest factor limiting our revenue growth…even with that being said our revenue is over 30% higher. ” 

Availability of products and extended lead times continue to plague respondents. 

“Incoming orders continue to be very strong,” Manthey explained. “Material pricing still on the rise, especially stainless steel but at least we are getting regular deliveries again. Lead times on new orders are stretching out to 4-6 months depending on material.”

Despite supply chain challenges, many participants’ sales are still exceeding expectations. 

“Sales still performing well above historical levels despite the supply chain challenges.” 

Fastenal’s 20.3% overall April daily sales growth was a touch below our 22.2% estimate and normal seasonality. Fastener sales were very strong at 25.5% y/y (essentially consistent with last month’s 25.2% growth), while safety was 16.7% and other non-fasteners was 17.8%.

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