Global Fastener News

The seasonally adjusted Fastener Distributor Index (FDI) bounced back to growth in February with a reading of 50.5 amid stabilizing demand.

Following solid m/m improvement in January, the FDI saw further modest sequential improvement in February. However, when looking at the underlying drivers, the FDI paints a slightly more mixed picture as three of the four components (sales, employment and customer inventories) were stable to lower from the previous month. Only the supplier deliveries index improved, which drove the overall m/m improvement in the headline FDI.

Looking at the sales index 31% of respondents indicated sales came in above seasonal expectations which was down vs. 44% in January but essentially matched the 30% average over the past year. Another 31% said sales were in line (41% in January), while 38% saw weaker sales than expected which was a sizable increase relative to just 15% last month.

“Overall, while the headline FDI showed some moderate m/m improvement, our key takeaway is that conditions were fairly steady in February,” wrote R.W. Baird analyst David Manthey (CFA) with Quinn Fredrickson (CFA). “Notably, however, the stable to slight improvement in demand conditions seen over the past five months is a marked improvement from the decelerating environment seen by participants throughout much of 2023.”

After accurately forecasting the rebound in this month’s FDI, the Forward-Looking Indicator (FLI) slightly retrenched, dipping to 47.9, implying contraction ahead. Deceleration in the FLI “reflected higher inventory levels for respondents and a lower six-month outlook.”

On the outlook specifically, 47% of respondents predicted higher activity six months from now vs. today compared to 54% last month. The percentage anticipating similar activity was 34% compared to 36% in January, while the percentage expecting softer activity was 19% (last month 10%). This drove the six-month outlook index to register a reading of 64.1 vs. 71.8 last month.

Feedback indicated demand remained at steady levels in February.

“While accelerating market growth would clearly be preferable, we view steady demand conditions as encouraging nonetheless after a long stretch of deceleration throughout 2023,” noted Manthey.

“January was a pretty good month and February was even stronger,” noted a participant. “Seems to be some good momentum as we move in to March. Let’s go! ”

The FDI is a monthly survey of North American fastener distributors conducted by the FCH Sourcing Network, the National Fastener Distributors Association and Baird. Web: fdisurvey.com