The 2020 Mid-Year Economic Update_long

Recommended Reading: Roadblocks Stymie Growth

MDM-Baird Distribution Survey shows distributor revenues fall again.
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Growing fears over China's economy and a global manufacturing slowdown joined the slumping oil & gas market and unfavorable currency exchange as significant roadblocks for distributors to navigate in the third quarter.

With these factors working against it, the industry plunged to its lowest average revenue in years, according to Grinding to a Halt, which includes the results of the most recent MDM-Baird Distribution Survey.

Excluding acquisitions, revenue growth was just 0.2 percent from July to September. That’s down from 4.4 percent revenue growth in the third quarter of 2014 and from 1.8 percent in the second quarter.

The industrial supply category performed especially poorly in the quarter, with an average growth of -1.3 percent among the category’s six sectors: MRO – manufacturing, safety, cutting tools, fasteners, mechanical/power transmission and hoses & accessories.

“Automotive business remains strong,” said one survey respondent who works in industrial supply. “However, the oil & gas market is having a strong adverse effect across a broad spectrum of customers in our region.”

Among the 19 product sectors, pool & spa registered the strongest revenue growth for the quarter at 6 percent – the sector’s second straight quarter on top. But five subsectors recorded negative revenue growth during the quarter: MRO – industrial/manufacturing (-0.3 percent), metalworking/cutting tools (-2.5 percent), hoses & accessories (-4 percent), mechanical/power transmission (-4.4 percent) and industrial/energy PVF (-7.7 percent).

While expectations were high to begin the year, sagging revenues across the industry have tempered them moving forward. Survey respondents project 0.6 percent revenue growth in the final quarter of 2015 and just 1.9 percent for next year – far below the 4.6 percent average over the past five years.

Read more about distributors' third-quarter revenues in Grinding to a Halt.

To gain even deeper insight into factors impacting wholesale distribution, purchase The MDM Competitive Landscape for Wholesale Distribution. This special report provides a comprehensive analysis of the $5.4-trillion wholesale distribution industry in the U.S., including economic benchmarks and segmentation of its vertical product channels, as well as key trends in 2015.

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