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Overall, third-quarter revenue grew at a rate of 6 percent, according to respondents, in line with expectations from second-quarter survey results.
But that doesn't mean there weren't any surprises. Construction-related sectors - including building materials, roofing and pool & spa - still posted declines in the quarter as residential and non-residential construction continue to struggle.
"Under the surface, we were surprised by the rapid descent of roofing," says David Manthey, Baird's senior analyst covering Industrial Distribution. "Earlier in the year, roofing was one of the top growth categories with strong pricing and good outlook; by the third quarter, roofing was among the weakest categories with negative pricing and a negative outlook."
Overall, respondents said pricing posted a more modest increase of 0.5 percent in the quarter, led by increases in Fasteners. On the inventory front, about a third of respondents increased inventory levels in the third quarter. About half of respondents expect no change in inventory levels in the fourth quarter.
Even with positive trends signaling some recovery in most sectors, uncertainty continues to dominate the conversation in the third-quarter survey. Executives are waiting to see what impact recently passed legislation, such as the health care reform, and of the just-completed midterm elections will have on businesses
And concern about a potential "double-dip" still exists.
With that in mind, respondents said they expect growth to continue through the fourth quarter and into 2011, but at a slower pace than seen for the second and third quarters of 2010.
Read more details from the Third Quarter Industrial Distribution Survey, conducted by R. W. Baird & Co. in partnership with MDM, in Third Quarter Benchmarking Survey Results Reflect ‘Guarded Optimism.’
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