3Q14 MDM-Baird Distribution Survey: Revenue Growth Hits Two-Year High

Slowdown projected for 4Q, but respondents encouraged by improvement to date in 2014.

Late summer and early fall proved to be a banner period for wholesale distributors. Third-quarter sales growth improved for the second consecutive quarter with a two-year high of 4.4 percent, up from a 3.5 percent increase in the second quarter and double the 2.2 percent increase in the first quarter, according to respondents to the third-quarter 2014 MDM-Baird Distribution Survey.

That marked the industry's best performance since the third quarter of 2012, helping 2014 recover from a slow start and giving survey respondents confidence heading into 2015. Although many expect business to cool slightly in the fourth quarter, with projected growth of 3.8 percent, most are cautiously upbeat for the longer term with an average sales growth forecast of 4.1 percent in 2015.

Datacomm was the survey's strongest-performing sector, notching revenue gains of 7.4 percent in the third quarter. Plumbing (6.6 percent), hoses & accessories (6.5 percent) and PVF – industrial & energy (5.8 percent) also performed well during the period.

No sectors showed revenue declines, but some lagged with little growth during the quarter, mostly those related to construction. Building materials saw just 1.4 percent revenue growth in the third quarter, while roofing (1.8 percent) and rental equipment (1.9 percent) also performed poorly relative to other sectors.

Looking ahead, the sectors that did well this past quarter are also expected to shine in the fourth quarter and into next year. Hoses & accessories has the highest 2015 revenue growth forecast in the survey at 6.9 percent. That category was followed by cutting tools (6.5 percent), datacomm (6.1 percent) and pool & spa (6 percent).

Thanks to everyone who participated in this quarter’s survey!

The quarterly survey with Robert W. Baird & Co. included about 500 respondents in distribution (70 percent of respondents) and manufacturing 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 third-quarter 2014 survey, including results by subsector, in the October 25, 2014, issue of MDM Premium.

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