Call it the calm before the storm.

The seasonally adjusted Fastener Distributor Index (FDI) improved slightly in March for the second consecutive month, reaching 52.6 vs. February (51.6).

“While tariffs are causing a lot of uncertainty regarding the outlook and hesitancy in customer buying patterns, March trends showed signs of improvement for most respondents,” wrote R.W. Baird analyst David Manthey (CFA) with Quinn Fredrickson (CFA).

Half of respondents reported sales came in above expectations in March, which is the highest percentage since March 2022 and an improvement from 40% in February and 27% in January.

Employment remained steady, with 72% of responses saying employment levels were similar month over month.

Pricing, meanwhile, has ratcheted “significantly higher” over the past two months as steel/Chinese tariffs took hold. Six in 10 (61%) of respondents said pricing was higher vs. last month, which follows 48% in February and just 17% in January. This drove the FDI Pricing Index to record the highest reading since early 2022.

However, the Forward-Looking Indicator (FLI) continued to moderate, slipping to 47 as “tariff/trade war headlines continue to dominate the news cycle and lead to anxiety over rising recession risk.” Overall, the FDI “suggests trends in the fastener market have slightly improved in recent months, but the FLI could suggest that improvement turns out to be short lived.”

Respondent commentary pointed to a significant uncertainty among customers, hesitant buying patterns, and “internal/external conversations that are almost exclusively focused on tariffs rather than growth.”

The six-month outlook continued its recent slide as just 44% of participants forecast better activity levels over the next six months vs. today – unchanged vs. last month but continuing to move lower since December when optimism had reigned (61% expected improvement at that time). Another 22% see similar trends continuing (down vs. 24% in February and 33% in January), while 33% forecast deteriorating sales (vs. 32% last month).

Industrial market trends seemed to be finding a bottom just prior to the latest round of tariff news, which could quickly erase this momentum.

Nearly all commentary was focused on tariffs in March, with several respondents indicating tariffs are leading to uneven customer buying patterns.

“After an initial rush to stuff inventory before the Trump Tariffs, most customers are now backing off. They all seem to hate the tariffs (rightly so) and are going to run out inventories before reordering.”

Another participant said: “Many customers [are] holding on orders due to tariffs. They have communicated that they are waiting in hopes that countries will negotiate, and the tariffs will be lower or eliminated in the coming weeks.”

Many respondents were “dismayed to be spending the vast majority of their time focused on tariffs” rather than growing their own businesses.

“Tariff wars [are] killing all our time, more meetings in a month than the past 5 years.”

“I think we would all be happy working with customers on fastener requirements rather than spending time addressing tariffs.”

Price increases are already starting to flow through as a result.

“North American pricing increases are primarily due to tariffs not higher cost of goods.” Similarly, “Pricing would be trending about the same absent of tariffs.”

If a near-term negotiated tariff resolution can be reached, some participants still see reasons to be optimistic about the future.

“If not for the tariff turmoil, I would have interpreted March activity and results as proof that the industrial market cycle had bottom out and was building momentum for the remainder of the year. Instead, I selected ‘same’ for my answer on future activity... selecting ‘lower’ just felt wrong even though it very well could be right.”

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