The Fastener Distributor Index (FDI) survey for November, 2024 dropped to 46.4 last month, changing course after rising to 56.5 in October, seasonally adjusted. Sentiment stayed positive as the Forward Looking Indicator (FLI) remained relatively stable at 52.3.
Key Takeaway:
The seasonally adjusted Fastener Distributor Index (FDI) dropped to 46.4 in November, marking the lowest FDI reading this year (October was 56.5) and reflecting retrenchment in the sales, supplier deliveries, and customer inventory indices. In contrast, this month’s Forward-Looking Indicator (FLI) painted a rosier picture, remaining essentially stable at 52.3 and indicating expectations for growth ahead. Net, it was a softer month for participants, which runs counter to the recent improvement in the FDI, however one month does not make a trend and the FLI continues to suggest improvement ahead into 2025.
Key Points:
FDI retrenches in November. The November seasonally adjusted FDI decreased sharply to just 46.4 from October’s 56.5. This marked the lowest reading of 2024 to date. That said, we caution against reading too much into one month’s result, especially in November given Thanksgiving/potential weather. The drivers of the contraction this month included sales (48.9 vs. 61.8 last month), supplier deliveries (46.7 vs. 61.7), and customer inventories (40.0 vs. 48.3). Of the four FDI components, only the employment index was stable m/m. Looking specifically at sales, just 33% of respondents indicated sales came in above seasonal expectations, which is below the 36% YTD average and 43% in October. Employment remained stable, with a full 77% of responses saying employment levels were similar m/m. Similarly, pricing looked mostly stable with October (63% of responses).
FLI remains in a healthy spot, however. The FLI registered a 52.3 reading, which was essentially unchanged m/m (October 52.6). We view the FLI as indicative of expectations among participants for slight acceleration in the coming months/2025. Consistent with this, 43% of participants forecast better activity levels over the next six months vs. today, while just 23% see lower and another 33% forecast stable trends. This is slightly less optimistic on balance than in October, however, when 50% forecast acceleration, 33% stable, and just 17% deceleration. We believe this suggests that, although some caution persists due to ongoing macroeconomic/inflation uncertainties, overall sentiment among participants leans cautiously optimistic. This resulted in the six-month outlook index remaining quite healthy at 60.0 (October 66.7). Considering the current length of the ISM PMI downcycle/downbeat fastener market conditions, future Fed rate cuts, and potential post-election acceleration with emphasis on domestic manufacturing, we believe optimism regarding a turn in conditions ahead could be merited.
READ FULL REPORT:
FDI_Report_November_2024
Listen to Fully Threaded Radio episode #207 of Fully Threaded Radio for further commentary and analysis.
About the Fastener Distributor Index (FDI).
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. 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).
Please share the FDI with your fellow North American fastener distributors and encourage them to participate: Go to: www.fastenersclearinghouse.com/fch/main.nsf/fFastenerDistributorIndex
RELATED CONTENT:
Fastener Distributor, Fastener Distributor Index, Fastener Industry, Fastener News, Fastener News Desk
