08/10/2017
July Report - Robust Sales; Optimism Moderating
NAHAD’s July Industry Trends Report continues to highlight robust sales and order activity driven by broad-based end-market improvement, including strength across heavy verticals of mining, oil & gas, ag and construction equipment. Order and backlog trends remain strong and suggest this favorable momentum is likely to continue for the remainder of the calendar year. Although near-term activity remains robust we are growing more conservative on the medium-term outlook as business optimism appears to be moderating.
Sales growth in our survey improved to ~10% in calendar 2Q compared with 6% growth in 1Q. Sales growth of 11% in June was just a touch slower than 12% growth in May which was helped by an extra selling day. Inventories were cited as “too low” for the first time since February 2013 and only the 3rd net too low reading in the history of our survey. This appears to reflect longer lead-times as over 50% of respondents cited slower supplier deliveries in June.
Distributors and manufacturers have left their full year outlook for 2017 unchanged at 8% growth on average. This is up from an initial outlook of 3% and follows a decline of ~5% in 2016.