US November Fastener Distributor Index Re-Enters Contraction, Has Biggest One-Month Drop Since July 2016
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Exhibition Name: US November Fastener Distributor Index Re-Enters Contraction, Has Biggest One-Month Drop Since July 2016
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The November Fastener Distributor Index — operated by FCH Sourcing Network in partnership with R.W. Baird — was posted on Thursday, showing its most precipitous drop in more than three years and falling into contraction territory.

Following a 3.9-point drop from September-to-October, the FDI fell even more sharply from October-to-November, sinking 5.4 points for November's reading, seasonally adjusted. It was the index's biggest one-month drop since July 2016 during that year's oil & gas downturn.

For the index, any reading above 50.0 indicates expansion, whereas anything below 50.0 indicates contraction.

The FDI's Forward-Looking-Indicator (FLI) — measuring distributors' outlook for the next six months — gained a modest 2.3 points from October to a mark of 46.5, still indicating overall pessimism.

"Sales trends on a seasonally adjusted basis were significantly weaker m/m, with a majority of respondents’ sales below expectations," commented R.W. Baird analyst David J. Manthey. "The six-month outlook was modestly improved, however, and the FLI was also slightly better. Overall, November fastener market conditions were soft following a string of four relatively solid months, but respondents’ implied December forecasts are for better demand conditions given an improved (albeit still sub-50) FLI."

The index had been in expansion territory for 20 consecutive months before dipping to 48.3 this past June.

In November's FDI, the seasonally-adjusted sales index plummeted 12.5 points from October to a mark of 35.5. Metrics for all other index factors declined as well. Year-to-year pricing (-5.8 to 78.8), Respondent Inventories (-4.0 to 65.2) and Supplier Deliveries (-3.6 to 51.5) had the largest drops.

In October's FDI, metrics for employment (48.7), supplier deliveries (55.1) and month-to-month pricing each fell at least two percentage points from September. Year-to-year pricing (84.6) gained 5.4 points, while respondent deliveries (69.2) and customer inventories (52.6) were relatively flat.

The FLI, measuring distributors' outlook for the next six months, bumped up 0.2 points from September, but was the sixth-straight month in notable contraction range.

"October remained stronger than many expected, firmly in expansion territory at 52.1," FCH managing partner Eric Dudas told Industrial Distribution. "Offsetting the positive news, this is amid clear signs of contraction and an overall softening outlook as shown in the weak FLI, which came in at 44.2."
 
See the full November FDI chart below

Source: Industrial Distribution
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