The Fastener Distributor Index (FDI) rebounded to 51.6 in February, signaling improvement in the fastener market after a weather/holiday-impacted January (47.6).
“Overall, it remains a mixed but slightly improving fastener demand environment,” wrote R.W. Baird analyst David Manthey (CFA) with Quinn Fredrickson (CFA).
Four in 10 respondents reported sales above seasonal expectations, consistent with the 34% average registered over the past year but “up nicely from just 27% in January and 15% in December.”
Employment stayed steady, with a “robust” 84% of responses saying employment levels were similar month over month.
“One noticeable change vs. last month was an uptick in participants noting higher pricing m/m, with many indicating this was an attempt to get ahead of potential tariffs.”
Nearly half (48%) of respondents said pricing rose in February, “up significantly from just 17% in January and the highest percentage across the FDI survey since May 2022.”
The Forward Looking Index fell to 47.3 (January 49.9) “as all eyes remain on tariffs.”
“Tariff headlines remain the primary drag on sentiment and are pressuring the FLI.”
About 44% of participants forecast better activity levels over the next six months, down from 50% in January and 61% in December. Another 24% see similar trends continuing (down vs. 33% in January), while 32% forecast deteriorating sales (vs. 17% last month).
“Sentiment is becoming more mixed, albeit still leaning slightly optimistic on balance (44% higher, 32% lower).”
Respondent commentary points to a “modest but long-awaited demand rebound finally beginning to materialize, though tariffs are seen as a threat to eliminate this momentum.” Indeed,, At 56, the the six-month outlook index down “significantly” from December (72.7).
“Still, with the ISM PMI downcycle of 26 consecutive months of a sub-50 reading coming to an end in January, and February also remaining above 50, the potential for additional Fed rate cuts ahead, and industrial market sentiment improving post-election, a favorable turn in demand conditions ahead remains a distinct possibility with any resolution on the tariff front.”
Pricing and tariffs dominate commentary
“[We are] raising pricing to offset some of the tariffs. [We are] also expecting increased activity as some customers are attempting to beat tariffs most likely coming,” stated on participant.
Another participant stated: “[The] tariff situation is causing uncertainty regarding pricing in the near future.”
Regarding demand, underlying trends are show signs of improvement, assuming tariffs do not disrupt the momentum.
“There were plenty of visible green shoots in our industrial business coming into the new year that shriveled and died in February. The tariff changes/expansions pack quite the punch for so much of our industry and greater economy and it seems inevitable at this point that the drag of inflation will soon renew. Our revised assumption is that the long overdue recovery will be postponed in the near term.”
Others reported strong demand and recovery.
“The month of February 2025 was only $15,000 shy of being our biggest selling February of all time. This is on the backside of January 2025 being our biggest selling January of all time. So far, so good this year.”
Despite tariffs, some remain optimistic about a recovery in demand.
“Starting to see some of the results of the new administration in our day-to-day business. Tariff concerns have driven demand of domestically manufactured screws slightly higher. We are hopeful that demand for domestically threaded fasteners continues at a moderate rate throughout the year,” one participant noted.
Another respondent noted: “We expect that regardless of tariff impacts, manufacturing and fastener sales will return to normal. We appear to be in a down cycle showing signs of reversal.”
Fastenal reported February daily sales grew 5%, including modest growth in fastener sales to 0.6%. Safety sales rose 8.5%, and other non-fastener product sales increased 6.8%.
The FDI is a monthly survey of North American fastener distributors conducted by the FCH Sourcing Network, the National Fastener Distributors Association and Baird.
