The fortunes of distribution were bound to change, as industry economists kept preaching at association meetings in the last half of 2016. Those forecasts came true in the first quarter of this year, according to the most recent MDM-Baird Distribution Survey.
Industry revenues averaged 3.4 percent in the quarter, their highest level in two years. That mark was well above the 0.4 percent decline in the fourth quarter and even higher than the 2.3 percent growth that respondents projected for the period.
"A confluence of improved industrial trends, more solid nonresidential construction trends and continued strength across residential replacement markets" drove the improvement in 1Q, according to Baird analysis. Minor weakness occurred only in waterworks products, landscape supplies and datacomm.
No sectors reported revenue declines in the first quarter, and none project a decline in the second quarter or for 2017 in its entirety. This surge was entirely expected, according to the economists who have been forecasting growth for the past year.
And so far, most of the 1Q economic reports support those projections. But it's not all rosy for the U.S. According to a recent Fitsnews LLC article, the most recent jobs report was a blow to "Trumphoria" – "the initial enthusiasm associated with the election of Donald Trump." With manufacturing jobs unchanged in March and construction employment increasing by only 6,000, Trump's position in the White House "clearly doesn’t appear to be translating into sustained demand."
We'll see what happens the rest of the year. Survey respondents projected revenue growth of 3.8 percent for the second quarter and 3.7 percent for the year. “Looks like we’re turning a corner, but no one’s popping Champagne yet,” is how one respondent described the current climate.
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 first-quarter 2017 survey, including results by subsector, in the April 25 issue of MDM Premium.