The Fastener Distributor Index (FDI) survey for October 2024 remained strong but dipped slightly to 56.5 after its surge to 59.0 the previous month, seasonally adjusted. Following suit, the Forward Looking Indicator (FLI) climbed further to 52.6.
Key Takeaway:
The seasonally adjusted Fastener Distributor Index (FDI) dipped slightly to 56.5 this month (September 59.0), reflecting deceleration in employment and customer inventories but an improvement in sales. Meanwhile, this month’s Forward-Looking Indicator (FLI) rose to 52.6, suggesting some optimism for November. Although an overall positive yet slower October performance for the index, taken together with other indicators (sustained sub-50 ISM PMI in October, flattish October Industrial Production, weaker FAST October sales, etc.), we believe fastener market conditions and the overall industrial economy continue to remain soft near term. That said, we do see reasons to believe an inflection could be ahead.
Key Points:
The FDI shows continued growth in October, although at a slower pace than September. The October seasonally adjusted FDI decreased to 56.5 from September’s 59.0, indicating continued, but slower growth. That said, removing last month’s seasonal adjusted factor would’ve resulted in a more stable m/m September FDI reading of 54.9, implying m/m growth in October. Two of the four underlying factors (sales and supplier deliveries) saw m/m improvement in October; employment moderated m/m while remaining above 50, while customer inventories was the only factor that posted an outright decline (sub-50 reading). Despite the m/m moderation, October’s FDI reading still meaningfully marks the second highest monthly FDI reading in 2024. The sales index reached 61.8 in October, up from 58.4 in September and signaling improving momentum. Demonstrating the slight improvement in underlying demand conditions, 43% of respondents indicated sales came in above seasonal expectations, which is higher than the 36% average registered over the past year. Consistent with the relatively flat US jobs report in October, employment levels moderated a bit, with the 51.7 FDI employment index a step down from last month’s 55.4 solid reading. Year-to-year pricing also noticeably lowered, reaching 56.7 compared to 62.5 in September, though still reflecting growth.
The FLI stays above 50, signaling better November expectations. The FLI climbed to 52.6 in October, up from 50.5 in September, suggesting an even more optimistic forward view for November among respondents. This positive shift was driven primarily by a stronger six-month outlook, as well as lower inventory levels. 50% of survey participants anticipate increased activity levels in the coming six months, up from 39% in September. Conversely, concerns about lower activity in the coming months decreased, with only 17% of respondents expressing this sentiment compared to 25% in September. This suggests that although some caution persists due to ongoing macroeconomic uncertainties, overall sentiment is becoming more positive. 33% of participants expect activity levels to remain stable. This caused the six-month outlook index to jump to 66.7 compared to 57.1 last month. Considering the current length of the ISM downcycle/downbeat fastener market conditions, future rate cuts, and post-election acceleration, we believe this month’s optimism regarding a turn in conditions ahead could be merited.
READ FULL REPORT:
FDI_Report_October_2024
Listen to Fully Threaded Radio episode #206 of Fully Threaded Radio for further commentary and analysis.
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Fastener Distributor, Fastener Distributor Index, Fastener News, Fastener News Desk
