Slowly but surely, despite a rash of stops and starts over the last few months, the economic recovery is forging ahead.
Amid continued uncertainty around COVID-19 and all its sordid companions, the fourth quarter of 2020 marked yet another period of companies solidifying their financial footing, according to preliminary results of the latest quarterly MDM-Baird Distribution Survey.
Distributors posted an industry average of -1.5% growth in the period, which was weaker than expected but still another quarter of sequential improvement, Baird analysts Dave Manthey and Quinn Fredrickson wrote in their 4Q preview.
The industry narrowed its revenue declines from the third quarter, when distributors, as a whole, posted average revenue of -3.2%. That decline was 80 basis points above the forecasted revenue dip in the quarter and about 260 bps below 1Q, the last pre-pandemic quarter (though even the tail end of that period was affected).
Here’s a snippet from Baird’s 4Q assessment: “Building Products came in above expectations, while Industrial Supply categories modestly trailed respondents forecasts. Looking forward, while Industrial Supply distributors forecast flattish first-quarter results, respondents were more bullish on the remainder of the year, raising the full-year forecast. Building Products distributors forecast sustained growth in 1Q21/2021.”
The full results of the survey, including revenue performance for 4Q and projections for 2021, will be in the January 25 edition of MDM Premium.
Latest Round of Reports
Here’s a rundown of economic reports that MDM has posted during the first two-plus weeks of January, including both distribution-specific and overall economic markets, showing marked improvement in many areas.
- Total industrial production grew 1.6% in December, according to the Industrial Production and Capacity Utilization Report, released Friday by the Federal Reserve. The index has recovered much of its 16.5% decline from February to April, but output in December was still 3.5% lower than its pre-pandemic February level.
- The combined value of distributive trade sales and manufacturers’ shipments for November, adjusted for seasonal and trading day differences but not for price changes, was estimated at $1,480.8 billion, up 1.5% from November 2019 but down 0.1% from October 2020, according to the U.S. Census Bureau.
- Indian River Consulting Group’s (IRCG) weekly Pandemic Revenue Index for the workweek of Jan. 4 to Jan. 8 increased 18.4% — the third straight week of double-digit growth and a strong start to the new year.
- U.S. manufacturing technology orders totaled $330.3 million, a 1.4% increase from the same month a year ago, according to the U.S. Manufacturing Technology Orders report published by AMT – The Association For Manufacturing Technology. However, new orders placed in November marked a 13.3% decrease from October. Orders to date reached $3.39 billion, a decrease of 18.7% from the 2019 YTD total.
- Wholesale trade dipped slightly in November compared to the same month a year ago but improved compared with October, according to the latest report from the U.S. Census Bureau. November 2020 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $496.7 billion, down 0.2% from the revised November 2019 level but up 0.2% from the revised October level.
- The seasonally adjusted Fastener Distributor Index (FDI) for December was 62.6, up from 54.5 in November, according to the latest analysis from Baird, FCH Sourcing Network and the Institute for Supply Management.
- New orders for manufactured durable goods in November increased $2.2 billion, or 0.9%, to $244.2 billion, according to a report released by the U.S. Census Bureau. This increase, up seven consecutive months, followed a 1.8% October increase. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders increased 0.7%. Transportation equipment, up six of the last seven months, led the increase, $1.5 billion or 1.9% to $78.8 billion.
- The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the goods and services deficit was $68.1 billion in November, up $5 billion from $63.1 billion in October, revised. November exports were $184.2 billion, $2.2 billion more than October exports. November imports were $252.3 billion, $7.2 billion more than October imports.
- Heating, Air-conditioning & Refrigeration Distributors International (HARDI), Columbus, Ohio, released its monthly TRENDS report, showing the average sales performance by HARDI distributors was an increase of 3.6% percent during November.
- Economic activity in the manufacturing sector improved in December, and the overall economy grew for the eighth consecutive month — after it had dipped significantly in the early stages of the coronavirus — according to the nation’s supply executives in the latest Manufacturing ISM Report on Business. The December Manufacturing PMI registered 60.7%, up 3.2% from the November reading of 57.5%. This figure indicates expansion in the overall economy for the eighth month in a row after contracting in March, April, and May, which ended 131 consecutive months of growth.
- Construction spending during November 2020 was estimated at a seasonally adjusted annual rate of $1,459.4 billion, 3.8% above the November 2019 estimate of $1,405.5 billion and 0.9% above the revised October estimate of $1,446.9 billion, according to the U.S. Census Bureau. During the first 11 months of 2020, construction spending amounted to $1,314.1 billion, 4.4% above the $1,258.8 billion for the same period in 2019.
Stay tuned to mdm.com for the latest economic benchmarks, including our special report in the January 25 edition of MDM Premium that will look specifically at how distributors are performing and their expectations for the first quarter and the remainder of the year.