The seasonally adjusted Fastener Distributor Index (FDI) saw modest m/m improvement, reading 52.9 in May vs. 51.6 in April, and continued to expand (above neutral reading of 50), albeit driven by just one component, supplier deliveries. Commentary was again mixed, but our overall read was that demand conditions in May were generally seen as acceptable, not great but not terrible either. Overall performance seems to be divergent among participants based on end market exposure. This month’s Forward-Looking Indicator (FLI) also improved vs. last month and climbed back into expansionary levels, reading 52.8. When taken together with other indicators (FAST, May ISM PMI), we believe market conditions in May remained fairly muted.
Key Points:
FDI improves m/m. The seasonally adjusted FDI moved modestly higher in May to 52.9 (April 51.6). That said, three of the four underlying components (sales, employment, and customer inventories) decelerated vs. April; only the supplier deliveries index improved by a sizable enough amount to offset the weakening in the other three components. As such, while the headline FDI technically improved, our interpretation is that underlying activity was relatively unchanged. Looking at the sales index specifically, 36% of respondents indicated sales came in above seasonal expectations – slightly lower vs. 47% last month but generally in line with the 33% average over the past year. 27% indicated sales were below expectations compared to 33% last month, while the remaining 36% said sales matched expectations (vs. 20% in April).
FLI points to slightly better conditions expected ahead. After registering an exactly neutral 50.0 in April, the FLI improved to 52.8 this month. Slightly leaner customer inventory levels, slower supplier deliveries, and a more optimistic six-month outlook all combined to drive the m/m acceleration. On the outlook specifically, views again leaned net more positive than negative (39% expecting higher activity levels six months from now vs. today compared to 18% lower), but the plurality of respondents continue to see activity sustaining at current levels (42% of responses). In April, 33% expected higher activity, 43% similar, and 23% lower. This drove the six-month outlook index to improve to 60.6 from 55.0.
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FDI_Report_May_2024RELATED CONTENT:
Fastener Distributor, Fastener Distributor Index, Fastener Industry, Fastener News, Fastener News Desk
