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12/09/2014

FPDA Economic Indicators Report Notes Ag Equipment Weakness

The October survey prepared for FPDA by Cleveland Research had 35 respondents comprised of 24 distributors and 11 manufacturing firms.

The impact of the Ag equipment weakness is beginning to show through industry numbers and weigh on 2015 forecasts. We see potential for ~200bps headwind to industry growth rates in 2015 from the sharp drop in Ag equipment business. Also concerning is oil & gas which could be the next shoe to drop with concern among some of our sources starting to grow. Although unlikely to fall sharply, flattish oil & gas activity in 2015 could have a similar 100-200bps impact to growth rates given the strength of this market over the past 12-months.

Highlights of the report include:

  • The October FPDA Index produced a reading of 62.8 down marginally from 63.8 in September. The broader ISM improved to 59.0, up from the 56.6 reading last month.
  • Sources in our fluid power survey indicate average sales were up 5% y/y moderating from 7% last month as Ag appears to be weighing on topline growth.
  • The 2015 Outlook is now forecast up 5%, down ~50bp from 5-6% 30 days ago with sources calling out weakness in Ag and concerns oil & gas activity could slow.
  • The October FPDA Index produced a reading of 62.8 down marginally from 63.8 in September. The broader ISM improved to 59.0, up from the 56.6 reading last month.

Review the full report here.

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