The Fastener Distributor Index (FDI) survey for July, 2024 dropped below 50, with a 47.5 reading versus 52.1 in June, seasonally adjusted. The Forward Looking Indicator (FLI) also dropped, sinking to 49.6.
Key Points:
FDI below 50 for first time since January. The July seasonally adjusted FDI declined to a reading of 47.5 compared to 52.1 in June. This was the first sub-50 reading (indicating contraction in market activity) since January. Three of the four underlying components (sales, employment, and supplier deliveries) weakened vs. June; only the customer inventories index improved by a slight amount. Looking at the sales index specifically, just 22% of respondents indicated sales came in above seasonal expectations compared to 29% last month and the 34% average over the past year. 47% said sales were below expectations, which was the highest percentage since July 2023 (70%) and compared to 26% last month, while the remaining 31% said sales matched expectations (vs. 45% in June).
FLI also back below 50. Consistent with the FDI, the FLI also saw m/m softening and now suggests further weakening is expected ahead. Compared to last month, the FLI decreased to 49.6 (June 50.9), which at below 50.0, signals an expectation for contraction in future market activity levels. All four subcomponents of the index contributed to the m/m contraction, with slightly lower employment levels, higher respondent and customer inventories, and a lower six-month outlook driving the deceleration. On the outlook specifically, views again leaned net more positive than negative (38% expecting higher activity levels six months from now vs. today compared to 31% lower) but at a narrower gap than prior months (May/June had a 24% net more optimistic outlook). The remaining 31% of participants forecast similar activity. In June, 45% expected higher activity, 35% similar, and 19% lower. This drove the sixmonth outlook index to weaken to just 53.1 from 62.9 last month.
Read the full report:
Fastener News Desk encourages all North American fastener distributors to take part in the FDI Monthly Survey.
If you are interested in being a more active part of the fastener industry, you can apply to add your company to the FDI survey group. Complete the Request an Invitation to Participate” form by clicking here. Once verified, you will receive login ID and password information and you will be notified by email every month when the survey period has been opened.
About the Fastener Distributor Index (FDI).
The Fastener Distributor Index (FDI) was developed as a service to the fastener industry by the FCH Sourcing Network in 2012 to be a new benchmark for the fastener industry. The FDI is a monthly survey of North American fastener distributors, conducted with the FCH Sourcing Network and Baird. It offers insights into current fastener industry trends/outlooks. Similarly, the Forward-Looking Indicator (FLI) is based on a weighted average of four forward-looking inputs from the FDI survey. This indicator is designed to provide directional perspective on future expectations for fastener market conditions. As diffusion indexes, values above 50.0 signal strength, while readings below 50.0 signal weakness. Over time, results should be directly relevant to Fastenal (FAST) and broadly relevant to other industrial distributors such as W.W. Grainger (GWW) and MSC Industrial (MSM).
The FDI Survey website is a resource than can be accessed by anyone, but it can only be updated by registered users during the monthly open survey period, which occurs during the last week of each month.
Listen to episode 203 of Fully Threaded Radio for further commentary.
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