The March FPDA Index produced a reading of 54.0, up from February’s reading of 46.9. The broader ISM index showed a reading of 54.2 in March, unchanged from February’s reading.
The March survey results were disappointing nearly across the board with weaker-than-expected sales growth, marking the second straight month of decline. Similar weakness in new orders resulted in a sequential drop in backlogs following two months of improvement. This appears to have shaken confidence among distributors and manufacturers with each lowering their full year expectations by 200bps on average.
We will look to April results before giving up on the notion that underlying activity is beginning to recover, setting the stage for a potential acceleration in the second half of the calendar year. February and March were each impacted by one fewer selling day, cold weather and tough comparisons and we note that some industrial distributors cited a pickup in April following a directionally similar slowdown in March.
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