Election Not Stopping Business Decisions

Companies resist urge to hunker down despite political uncertainty.
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For all the uncertainty swirling around the presidential race, distributors are not deferring business decisions pending the election, according to respondents to the third-quarter 2016 MDM-Baird Distribution Survey.

Just 16 percent of respondents said they have deferred a business decision ahead of the election, now just three weeks away. Of those who have, 45 percent said they chose to defer investment spending, followed by hiring (42 percent), employee compensation/benefits (29 percent) and maintenance spending (13 percent).

Four years ago, in the 3Q2012 survey, 44 percent of respondents said they had deferred business decisions in the months leading up to that year's election.

Both sides of the investment debate were found in the comments on this quarter's survey: "Feels like everyone is in a holding pattern awaiting the election," said one industrial gases respondent. "We see our customers hesitant to spend money, we have welders out of work, and we have mines preparing to be shut down."

On the other hand, "the biggest thing is that you can't rely on existing customers to grow the business, (you) have to keep looking for new business," said an industrial supply respondent.

Distributors said they saw 0.5 percent revenue growth in the third quarter. While that's the first positive growth after three straight quarters of declines, it still fell short of respondents' 1.9 percent revenue growth for 3Q.

Solid growth in building products and facilities maintenance offset continued industrial weakness, and all geographic regions were flat except for the South, which saw around 3 percent growth. Survey respondents project 0.9 percent revenue growth in 4Q and 2.2 percent revenue growth in 2017.

Many thanks to those 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 2016 survey, including results by subsector, in the October 25, 2016, issue of MDM Premium.

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