Recommended Reading: Better Days Ahead for Industrial Supply?

After yet another quarter of revenue decline, sector finally projected to improve.
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Weakness in industrial end markets negated growth in other sectors during the past year, stunting revenues across distribution, but better days could be coming, according to respondents to the latest MDM-Baird Distribution Survey in Industry Sputtering Back to Life.

Excluding acquisitions, distributors overall averaged 0.5 percent revenue growth in the third quarter, according to the survey. That ended three consecutive quarters of negative growth, although it fell short of their projected 1.9 percent revenue improvement for the period.

And while struggles continued for sectors in the industrial supply category – which averaged -1.4 percent revenue growth for the quarter, the lowest among the five categories – survey respondents expect slightly better days ahead. They now forecast -0.4 percent revenue growth for the fourth quarter and 1 percent growth for 2017.

With the exception of fasteners, whose 2017 projection is -1.1 percent revenue growth, all sectors project improvement next year. Respondents expect slow growth for metalworking/cutting tools (2 percent), safety (1.8 percent), hoses & accessories (1.1 percent), mechanical/power transmission (1.1 percent) and MRO – manufacturing (0.8 percent).

"We're not expecting meaningful tailwinds next year," said one survey respondent. "Whatever growth we generate will be because we’re adding market share."

Meanwhile, the ISA Distributor Index decreased to 57.1 in September from 66.3 in August, but respondents to that survey also expect some improvement.

"Comments from survey participants demonstrate the mixed results, ranging from 'Business conditions still continue to be solid and steady,' to 'Business conditions have become very sluggish,'" said Bryon Shafer, general manager of ASG Industrial and chair of ISA's Strategic Information Committee. "However, both distributors and manufacturers expect conditions to improve in October."

Read more about the glimmer of hope for industrial supply companies, as well as other results from 3Q and projections for next year, in Industry Sputtering Back to Life.

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