06/17/2016

NAHAD Industry Trends Update - May 2016

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May 2016 marked the 14th consecutive month of negative year-over-year sales growth due to continued headwinds from oil & gas, heavy equipment verticals, and slow project activity. The lack of improvement against easier year-ago comparisons and sharp drop in backlogs suggests this protracted downturn is now likely to carry into the 2nd half of the year. We continue to believe the pace of a recovery will be tepid at best and are cognizant of the potential for additional headwinds from consumer facing verticals (auto, food & beverage, life sciences)

• Adjusted for selling days, average sales declined ~6% in May following a ~2% decline in April. The softer results came against a 200bps easier comparison.
• Orders declined 3% on average in May following a 4% decline in April with a net 12% seeing lower orders sequentially from April to May. Notably, backlogs fell sharply in May with a net 33% of participants reporting weaker backlogs in May vs. April.
• The 2016 outlook was revised lower to down 4% on average from down 2% last month. The revised outlook implies sales down ~3% on average over the remaining seven months of the year following down ~5% over the first five months.