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FDI: July Signals Contraction for U.S. Fastener Distributors
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2012-11-23
Mirroring the PMI, July's Fastener Distributor Index (FDI) signaled contraction (45.1, vs. 51.6 in June). Building on a June that reflected slowing (51.6, from 56.3 in May), July's FDI fell to 45.1.
"Being below 50 suggests more fastener distributors are experiencing worse-than-expected conditions that point to conditions that are or may soon be contracting."
Sales was the highlighter, reflecting far worse than expected performance with a reading of 38.2, down from 42.2 in June, FIN reported. But another factor came into play. "For the first month since the series started Employment was not up (50.0 in July)." Also notable, Supplier Deliveries (51.3, vs. 60.9 in June) sped up, suggesting that demands on production are moderating. Automotive was clearly a stronger end market, but construction was mixed in July after a stronger start to the year.
"Mirroring many broader economic measures, more fastener distributors saw worse than expected performance in July, representing a risk to the cycle." Erosion of optimism in recent months continued in July: 18% of respondents expect higher activity in six months (25% in June), vs. 45% that expect lower (38% in June).
At present, pricing remains stable. Respondents with positive annual gains (36.8% of total) outpaced those feeling pricing pressure (13.2% of respondents), while one-in-two respondents see no change in annual price. "All this makes the trend in the annual rate of change unsurprising: point-of-sale pricing was -1.5% in July, consistent with June but half the rate of growth through the first part of 2011 (-3.0%). With no impetus to raise prices and past increases anniversary, annual pricing is drifting toward 0%."
The FDI is a monthly survey of North American fastener distributors. As a diffusion index, readings above 50 signals strength and below 50 signals weakness.
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reference from FIN, arranged by Fastener World Inc.
2012-11-23

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