The Fastener Distributor Index (FDI) survey for September, 2024. The FDI surged to 59.0 in September versus 53.8 the previous month, seasonally adjusted. Similarly, the Forward Looking Indicator (FLI) rose to 50.5.
Key Takeaway:
The seasonally adjusted Fastener Distributor Index (FDI) jumped to 59.0 in September (August 53.8), reflecting improvement across several metrics, including sales, employment, and pricing but also a favorable seasonal adjustment factor. Meanwhile, the month’s Forward-Looking Indicator (FLI) also returned to very slight growth this month, climbing to 50.5, suggesting a relatively stable/slightly better outlook for October. Although an overall positive September performance for the index, taken together with other indicators (continued sub-50 ISM PMI in September, flat August Industrial Production, weaker FAST August sales, etc.), we believe fastener market conditions and the industrial economy in general remain soft but perhaps slightly better m/m.
Key Points:
FDI sees m/m improvement, albeit aided by seasonal adjustment factor. The September seasonally adjusted FDI surged to a reading of 59.0 compared to August’s 53.8, marking the highest monthly FDI reading this year. Three of the four underlying factors (sales, employment, and customer inventories) saw m/m improvement; supplier deliveries dipped slightly lower, albeit still growing (60.7 vs August 62.9). The sales index reached 58.4 in September, compared to 50.2 in August, indicating stronger demand and higher performance against seasonal expectations. That said, the seasonal adjustment factor played a significant role; ex. this, the non-seasonally adjusted FDI would have still grown (>50) but remained relatively stable m/m (54.9 vs. 53.6 in August). Demonstrating the relatively stable underlying demand conditions, just 36% of respondents indicated sales came in above seasonal expectations, which is generally consistent with the 34% average registered over the past year. Consistent with the healthy broader US jobs report in September, employment levels were solid, with the 55.4 FDI employment index a step up from last month’s 50.0. Year-to-year pricing also showed a noticeably strong jump, reaching 62.5 compared to 45.2 in August, marking the highest reading this year.
FLI rises above 50, signaling stable to slightly better October expectations. In contrast to last month’s contraction (August 47.4), the FLI climbed to 50.5 in September, suggesting a touch more optimistic forward view for respondents. This marks a positive shift, driven primarily by better employment levels and a stronger six-month outlook. Inventory levels were a slight headwind to the index as customer inventories rose modestly (21% said customers inventories were too high this month vs. 16% in August). Respondent inventories normalized some (index was 64.3 vs. August 67.7), although a strong majority see inventory as at appropriate levels (64%). On the outlook specifically, 39% of participants anticipate higher activity levels in the six months ahead, up from 32% in August but still at relatively muted levels. On the other hand, a segment of respondents (25%) remains concerned about lower activity in the coming months, indicating that some level of caution persists with an ongoing uncertain macro environment. The remaining 36% of participants forecast similar activity. In August, only 32% expected higher activity, 39% similar, and 29% lower. This caused the six-month outlook index to jump to 57.1 compared to 51.6 last month.
READ FULL REPORT:
FDI_Report_September_2024
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 205 of Fully Threaded Radio for further commentary and analysis.
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Fastener Distributor, Fastener Distributor Index, Fastener Industry, Fastener News, Fastener News Podcast, Industrial Distribution
