FCH Sourcing Network's monthly Fastener Distributor Index (FDI) set a new record-low during April amid worsening impacts from the COVID-19 pandemic, hitting the lowest mark in the index's nine-year history.
The FDI — operated by FCH in partnership with R.W. Baird — showed that April registered a seasonally-adjusted reading of 40.0, declining 4.4 points from March, which was already tied for the previous record-low.
For the index, any reading above 50.0 indicates expansion, whereas anything below 50.0 indicates contraction.
On the positive side, the FDI's forward-looking-indicator (FLI) — which measures distributor respondents' expectations for future fastener market conditions — showed some signs of stabilization by improving 2.9 points to 36.2
"Net, conditions remain very weak, but expectations for a gradual reopening of the economy have some participants leaning slightly more optimistic than previously," noted R.W. Baird analyst David Manthey, CFA, about the April FDI.
April's index included a seasonally-adjusted sales index that took another 20.6 point nosedive from March to a paltry mark of 14.0, compared to 54.9 just two months earlier. The sales index indicates that April selling conditions were at an all-time worst in the index's nine-year history.
The index indicated that April hiring stabilized, albeit at a low level. April's employment reading of 26.8 was near March's 27.0. Manthey said no FDI survey respondent noted higher employment levels compared to seasonal expectations for a second-straight month and that 46 percent characterized employment as below expectations — the highest such percentage in survey history.
In other April FDI metrics:
- Supplier deliveries increased 8.1 points from March to 76.8
- Respondent inventories increased 3.4 points from March to 68.3
- Customer inventories dipped 1 point to 47.6
- Month-to-month pricing jumped 9.8 points from March to 59.8
- Year-to-year pricing improved 6.3 points from March to 67.1
Looking at expected activity levels over the next six months, sentiment shows a pessimistic outlook, though better than in March:
- 54 percent of respondents expect lower activity over the next six months (73 percent in March)
- 34 percent expect higher activity (16 percent in March)
- 12 percent expect similar activity (March 11 percent)
Baird shared that FDI respondent commentary was downbeat, but that some are optimistic about future conditions. Respondent quotes included the following:
- "We lost 80 percent of our sales. It will not get better if we continue the [shelter in place] since most of our customers are closed. Those that are open have limited work they are allowed to do at this time.”
- “We are hoping for higher activity once the stay at home orders are lifted."
- “April sales were down 14 percent. I expect May might be up slightly up because businesses seem to be opening up slowly.”
- “Even with some states opening up, the climb back to normal levels I expect to be slow. Some manufacturing was already trying to recover from 2 slow quarters prior to the pandemic.”
See the full FDI April chart below: