The January Fastener Distributor Index (FDI) slipped to 47.6 from December’s 48.1, primarily due to a “weak sales index amid a slow start to the month (New Years fell on Wednesday this year prompting some to take extended shutdowns) and unfavorable weather,” wrote R.W. Baird analyst David Manthey (CFA) with Quinn Fredrickson (CFA).

That trend was echoed by publicly traded industrial distributors (Applied Industrial, Fastenal, and Grainger), who made similar commentary about sluggish sales trends through mid-January before seeing acceleration in the back half of the month.

Among FDI participants, only 27% of respondents indicated sales exceeded seasonal expectations in January — below the 34% average registered throughout 2024. Employment remained mostly stable, with a full 63% of responses saying employment levels were similar month to month.

Similarly, pricing looked stable with December (73% of responses).

The Forward Looking Index retreated below 50 for the first time since August, dropping to 49.9 in January (December 51.4).

“Based on respondent commentary and a slightly weaker six-month outlook, we believe tariff headlines likely pressured sentiment and the FLI.”

Half of participants forecast better activity levels over the next six months vs. today – down from 61% in December. Another 33% see similar trends continuing (up vs. 24% in December), while 17% forecast deteriorating sales (vs. 15% last month).

“Still, sentiment leans net optimistic, and the FLI had been on a mostly upward trend since August. Thus, we believe that, although some caution persists due to ongoing macroeconomic/inflation/tariff uncertainties, overall sentiment among participants continues to lean cautiously optimistic on the 2025 outlook overall.”

The six-month outlook index remains “healthy” at 66.7, which, although down from 72.7 in December, still represented the second highest reading since August 2021.

“With the ISM PMI down-cycle of 26 consecutive months of a sub-50 reading also coming to an end in January, the potential for additional Fed rate cuts ahead, and industrial sentiment improving post-election, we continue to consider a turn in conditions ahead to be a reasonable expectation.”

Most commentary focused on tariffs and the potential headwinds both to demand and logistics.

“Worried about the tariffs from Canada and Mexico... if they happen, it will be a challenging year,” stated one participant.

“Continued trepidation with how Trumps trade policies will affect international business on both the sell and buy side, and its effects on the supply chain and logistics,” another commented.

Tariffs are seen as likely to increase inflation, which respondents may struggle to pass along.

“Join the wild tariff ride! No telling what may happen. Expect delays at the ports for 1-3 weeks as the deadline approaches to clear customs before the increase hits. Domestic manufacturing should heat up and material prices are expected to increase as domestic manufacturers take advantage of the ability to improve pricing while tariffs are increased.”

Fastenal reported January daily sales growth of +1.9%. Growth was +1.4% weaker than normal seasonality would imply due to weather and holiday timing. Fastener sales declined to -1.7%, while safety sales grew 3.7% and other non-fastener product sales grew 3.5%.

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