The seasonally adjusted Fastener Distributor Index (FDI) improved to 53.8 in August (July 47.5), “mainly on a recovery from last month’s abysmal sales reading, much slower supplier deliveries, and slightly higher pricing,” wrote R.W. Baird analyst David Manthey (CFA) with Quinn Fredrickson (CFA).

Sales, supplier deliveries, and customer inventories) drove the improvement, while employment remained flat.

“Looking at the sales index specifically, this month saw a nice recovery from a very soft July.”

Nearly four in 10 respondents (35%) indicated sales came in above seasonal expectations compared to just 22% last month and the 34% average over the past year. An equal amount of respondents said sales were in line with expectations (32% vs. 31% in July) or below expectations (also 32%, July 47%).

Despite the strength in the FDI, respondents saw August’s performance as a short-term bump. The FLI decreased to 47.4 (July 49.6), which is the third consecutive m/m decline in the index and the second-lowest reading all year.

“Fastener market conditions and the industrial economy in general continued to be soft but slightly better... in August.”

On the outlook specifically, views again leaned net more positive than negative (32% expecting higher activity levels six months from now vs. today compared to 29% lower) but the enthusiasm gap continues to narrow (May/June had a 24% net more optimistic outlook, July was 7% net optimistic). The remaining 39% of participants forecast similar activity. In July, 38% expected higher activity, 31% similar, and 31% lower. This drove the six-month outlook index to weaken to just 51.6 from 53.1 last month.

Comments were mixed. Some saw strong incoming orders and have a generally positive outlook for the remainder of 2024.

“August in-coming order rate was better than July so that was good to see. High hopes for the final four months of the year.”

"This was our best August in terms of sales in our company’s 50-year history!”

Conversely, one comment warned of slowing into the fourth quarter. Others saw very soft order/sales trends in August.

“Much slower period, sales fell off a cliff.”

“More weakening sales activity at this time. Slightly weaker than expected.”

Fastenal reported August daily sales growth of 2.1%, with fastener sales dropping 2.2% vs. last month’s 6.3% decline - marking the 16th consecutive month of either flat or declining y/y fastener sales for the company. Safety sales improved 5.8% and other non-fasteners grew 3.7% y/y.

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