The Fastener Distributor Index (FDI) survey for October, 2023. The FDI rebounded last month to 52.6 after its disappointing 48.5 in September, seasonally adjusted.
The Forward Looking Indicator (FLI) also climbed, although it remains in contractionary territory at 47.1.
Key Takeaway:
The seasonally adjusted Fastener Distributor Index (FDI) improved m/m and returned to an above-50 reading at 52.6. Improving attitudes about the economy and more stable trends within respondents’ businesses were noted this month. Importantly, this marked the first reading above 50 since February (August was 50.0). The Forward Looking Indicator (FLI) improved m/m and continues to climb closer to a neutral 50 reading rising to 47.
Key Points:
FDI improves m/m, back to expansionary levels. The seasonally adjusted October FDI (52.6) improved from last month (48.5) and returned to growth (>50) for the first time since February. Looking at the overall components of the FDI, three of the four (sales, employment, and supplier delivers) improved m/m, while customer inventories were unchanged. The sales index saw the biggest m/m improvement (non-seasonally adjusted index improved from just 37.1 last month to 54.7 in October). Respondents reported a bit of a lift from the economy this month: “The economy seems to be causing an increased demand for products within our niche market.” 44% of respondents indicated sales were above seasonal expectations compared to just 16% last month. Another 22% said sales were in line (42% last month), while 34% saw weaker sales than expected (September 42%). FLI inching closer to neutral 50 level. The FLI also saw improvement, coming in at 47.1 vs. 44.8 last month. With the index still below 50, some additional softening could be expected in the near term, but bigger picture, the FLI continues to climb back up towards 50, which we see as encouraging. A softer employment reading and lower respondent inventory levels more than offset a modestly weaker six-month outlook, driving the m/m improvement in the FLI. On the outlook specifically, 25% of respondents predicted higher activity levels six months from now vs. today compared to 29% last month. The percentage anticipating similar activity was 47% compared to 45% in September, while the percentage expecting softer activity was modestly higher at 28% from 26%. After the seasonal adjustment factor, the six-month outlook came in at 47.1 vs. 44.8 last month.
Read full report:
FDI_Report_October_2023
Listen to episode #194 of the Fully Threaded Radio podcast for further commentary.
We encourages all North American fastener distributors to take part in the FDI Monthly Survey.
If you are interested in being a more active part of the fastener industry, you can apply to add your company to the FDI survey group. Complete the “Request an Invitation to Participate” form by clicking here. Once verified, you will receive login ID and password information and you will be notified by email every month when the survey period has been opened.
– Fastener News Desk
About the Fastener Distributor Index (FDI).
The Fastener Distributor Index (FDI) was developed as a service to the fastener industry by the FCH Sourcing Network in 2012 to be a new benchmark for the fastener industry. 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 from the FDI survey. 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).
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.
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