Key Insights from MDM's 2023 Mid-Year Economic Update - Modern Distribution Management

Log In

Key Insights from MDM’s 2023 Mid-Year Economic Update

MDM's annual Mid-Year Economic Forecast webcast provided a current snapshot of market conditions and what to expect in a likely bumpy road ahead.
Advance economic indicators February 2021

MDM’s proprietary U.S. distribution revenue forecast shows 2023 in decline -0.8%, remaining flat, or slightly under, overall, and then creeping to a slow, mid-level single-digit growth of 3.5% in 2024, shared MDM’s CEO Tom Gale in a July 13 webcast. 

For the 15th year, MDM has joined experts in the wholesale distribution industry to take a pulse of where the U.S. is midway through the calendar year, highlighting key trends and diving into the latest forecasts. The 2023 Mid-Year Economic Update webcast — now available to watch on-demand — also features the latest data and insights from the 2Q23 Baird-MDM Industrial Distribution Survey.

David Manthey, Baird’s Senior Research Analyst covering Industrial Distribution and Environmental Services, said the U.S. Treasury Yield Curve, which is an important indicator of the broader market and economy has a clear inversion. An inversion has been a signal that has preceded a recession in every case over the past 50 years, Manthey said.

“On the distribution team here at Baird, we are not in the soft-landing camp,” Manthey said. “We think there will be a recession.”

Leading Economic Indicators

Industrial Manufacturing: The ISM Purchasing Managers’ Index (PMI) hit a cyclical peak of 64.7 in March 2021 and has fallen ever since. 

“In theory, we could be closer to the end of this downturn than the beginning,” he said. Part of the reason, he said is because “pricing has been so strong and holding up the revenue growth for those companies [public distributors], even though the volumes have been moderating.”

Residential Construction: Existing home sales continue to languish, but remodeling activity continues to be at high levels.

Non-Residential Construction: Leading indicators of commercial construction are mixed. Dodge contracts remain strong while commercial real estate loan demand has weakened.

Manthey said through Baird research, reshoring/nearshoring will add roughly 1% to broadly industrial supply categories or MRO categories over the next 10 years to industry growth. 

“It’ll also add to construction to some extent, and it’ll add to a number of other service and product categories,” he said.”

2Q23 Baird-MDM Industrial Distribution Survey Results 

Manthey also shared results of the Baird-MDM 2Q23 Survey, which collects responses from roughly 500 private wholesale distributors across 18 different product categories.

Premium subscribers can find a wealth of economic data snapshots, forecasts and distributor commentary from the Baird-MDM 2Q23 Survey in MDM’s 2Q MarketPulse Report, which will be available to download later this week. But here are some highlights: 

  • Sales growth turned negative for the first time since the fourth quarter of 2020.
  • Volume growth is down in the first half of 2023. “As volumes continue to tail off, as pricing diminishes over time, we’re seeing what we would expect to see: which is revenue deceleration, which probably continues into the second half of 2023,” Manthey said.
  • Forecasts for 2023 sharply lowered for the third consecutive quarter and are now almost flat.
  • 15 of 18 product categories underperformed respondents’ expectations weakened from 90 days ago.

Themes Shaping the Competitive Landscape of Whole Distribution

Closing the Technology Gap

After having to “paper over” and create technology solutions to address some of the COVID-19 pandemic-induced supply chain challenges to wholesale distributors, many businesses are now accelerating their digital transformation, said Ranga Bodla, Vice President of Field Engagement and Marketing at Oracle NetSuite, the webcast’s longtime sponsor. 

“While we’re largely past many of the issues that surfaced back in March 2020, I think one of the big things that it exposed was a huge hole from a technology perspective in many of the distributors and other businesses that we talked to, particularly in having flexibility in how they run their business when you have these massive disruptions,” said Bodla, who has over 20 years of combined product management and marketing experience in the software technology industry. 

Bolda said regardless of sector of business type, all businesses are in the growth mindset. 

Digital-First Hybrid Sales Model

MDM’s latest research has shown that distributors at any stage or phase in their journey are on a path to creating a hybrid sales model using more analytics. 

“The core outside sales model was really showing some cracks in terms of its ability to meet changing needs of customers, particularly with the impact of digital and the rise of Amazon and other disruptive players who came into the market,” Gale said. 

Gale says he believes the distributors that have historically been transactional and ERP-centric are transforming to customer-centric. 

Find many more data points, market and industry analysis by watching the on-demand webcast.

For more insights into hybrid sales models and other trends driving the wholesale distribution industry, register and tune into MDM’s free one-day 2023 Profitability Summit on July 19. And don’t miss the annual SHIFT conference to be held Sept. 18-20 in Denver. 

Related Posts

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Get the MDM Update Newsletter

Wholesale distribution news and trends delivered right to your inbox.

Sign-up for our free newsletter and get:

  • Up-to-date news in a quick-to-read format
  • Free access to webcasts, podcasts and live events
  • Exclusive whitepapers, research and reports
  • And more!


articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events



You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.

Learn More about Custom Reports

Request a Market Prospector Demo

  • This field is for validation purposes and should be left unchanged.