2016 ended the way it began – with a whimper. Industry revenues tumbled into the red for the fourth time in five quarters, yet distributors are optimistic for a rebound this year, according to the most recent MDM-Baird Distribution Survey.
Excluding acquisitions, fourth-quarter 2016 revenues were -0.4 percent, well short of the projected 0.9 percent growth for the period. The electrical sector was a weak spot for the industry, offsetting strength in building materials and improvement across several other product categories.
Yet survey respondents are overwhelmingly upbeat. They project revenue growth of 2.3 percent for the first quarter and 3.6 percent for the year, with no sectors forecasting a negative first quarter or 2017.
Most of it is based on hope that the new presidential administration's proposed policy changes will spark growth, even though economists have said the politically agnostic U.S. economy might bounce back at some point in 2017 no matter who won the White House.
"There seemed to be a tremendous freeing up of money late 3Q, early 4Q," said one respondent in industrial gases. "Trump has only increased the exuberance." A respondent in the industrial supply category said the industry is "waiting for the Trump effect to hit. All signs are pointing up, but not any movement yet." Another added, "In general we see the Trump leadership change as positive for business but not forecasting any changes until we see specifics."
The quarterly survey with Robert W. Baird & Co. included responses from more than 500 distributors and manufacturers in diverse sectors. The survey's goal is to gauge business trends and the outlook for the industry.
Read more about the results of the fourth-quarter 2016 survey, including results by subsector, in the Jan. 25 issue of MDM Premium.