NAW-McGladrey Report: Distributors Optimistic About Economy, but Expect Headwinds

Distributors expect growth to be tempered somewhat by government actions and rising employee costs.
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In line with the second quarter 2013 MDM-Baird Distribution Survey results, executives surveyed for the 2013 McGladrey/NAW Institute Distribution Monitor have positive outlooks for the near future.

In the MDM-Baird survey results, just 11 percent said they expect economic conditions to worsen in the second half of 2013.

In the NAW-McGladrey report, 87 percent reported that they are optimistic about their businesses’ growth in the coming year, and 75 percent are optimistic for the distribution industry in general.

The recently released report was put together by McGladrey LLP, which provides assurance, tax and consulting services, and the National Association of Wholesaler-Distributors’ Institute for Distribution Excellence.

An even better sign is that nearly two-thirds of respondents are planning to add jobs in the next 12 months, with an average expected increase of 4.4 percent. However, most distribution executives in the survey said they expect a variety of employee costs to increase substantially in the next 12 months. In particular, while wages and other benefits are expected to increase at an average rate of around 4 percent, executives expect health care costs to rise by an average of 11 percent.

Read more about hiring plans and challenges distributors are facing.

Distributors in the survey expect growth to be tempered by government regulation, health reform implementation, as well as the federal deficit and the increase in payroll taxes for Social Security and Medicare.

Distributors also expect significant increases in materials and components costs, and in several areas, concern about these costs is on the rise. Ninetytwo percent of executives expect increases in transportation/fuel costs, compared to 77 percent in 2012; 84 percent of executives expect increases in energy/utilities costs in 2013 (an average of 4.5 percent), compared to 70 percent in 2012; and 83 percent of executives expect increases in costs of inventory/materials/components in 2013, compared to 73 percent in 2012.

Get the full McGladrey report.

Look for more coverage of this annual NAW report over the next week on mdm.com.

Get more details on the economic outlook in MDM’s Mid-Year Economic Update.

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