‘Good Days Ahead’ for U.S.

Slight uptick in MDM-Baird Distribution Survey positive sign for industry.
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Although distributors registered -0.1 percent revenue growth in the first quarter – well short of expectations and the second straight quarter of negative performance – a slight shift upward bodes well for the industry, according to MDM-Baird Distribution Survey: 2016 a Turning Point?

Mild winter weather and easing headwinds helped distributors improve from -0.6 percent revenue growth in the fourth quarter of 2015, providing a potential spark to get the industry back on track. Survey respondents now forecast 1.5 percent revenue growth in the second quarter and 2.2 percent revenue growth for 2016.

Whether or not the first quarter will prove to be a turning point for distributors, optimism permeated last week's Industrial Supply Association conference in Chicago, IL, where Alan Beaulieu of ITR Economics told attendees, "You should be happier and feeling better about life."

Robust consumer confidence, solid employment, rising wages, a weakening U.S. dollar, slightly more expensive oil and other factors fueled Beaulieu's prediction of "good days ahead for the U.S."

In the first quarter, the building products and facilities maintenance category was one of the few among 19 product sectors that performed well, taking the top four spots and six of the top eight in the MDM-Baird Distribution Survey. Lumber and building materials posted the strongest revenue growth at 5 percent. This sector is expected to dip slightly in the second quarter, with projected revenue growth of 4.6 percent, and to continue downward with a 2016 forecast of 3.9 percent.

Rounding out the top five were plumbing (4.5 percent), pool & spa (4.3 percent), and HVAC and waterworks (3.9 percent each). Respondents project plumbing to grow 6 percent in 2016, HVAC 4.4 percent, waterworks 3.2 percent and pool & spa 3 percent. MRO – non-manufacturing is forecasted to have the strongest year with 6.6 percent revenue growth.

Read more about how distribution performed in 1Q and what the expectations are for the rest of the year in MDM-Baird Distribution Survey: 2016 a Turning Point?

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