ASA Distributor Members Report Double-Digit Spike from July to August in Sales Growth

Respondents reported median year-over-year sales growth of 2% for August 2023 vs. 2022. While this is encouraging, it remains worth noting that over 40% of respondents reported sales declines for August 2023 vs. 2022. On a month-to-month basis (August vs. July 2023), respondents reported a double digit increase of nearly 14%.  Inventory contracted (-1%) for August 2023 vs. August 2022. The median Three-Months Average Days Sales Outstanding edged up to nearly 42 days in August.

Industrial PVF:
PVF distributor respondents to the survey reported a 9.1% sales increase comparing August 2023 to August 2022. Calendar year-to-date, PVF distributors reported a 7.4% increase in sales, and a 10.8% increase when comparing trailing-12-month totals.

Economic Indicators:
The "Real" GDP growth for the 2nd quarter 2023 was revised down from 2.4% to 2.1%. Total wholesale sales for July contracted -4% year over year, while inventories grew 0.5% vs. the prior year. The positive 1% growth in "Real" wholesale sales continues to reinforce a sign that inflation is beginning to calm and that we are entering a disinflationary period.

Housing permits were up for August vs. July, but housing starts declined to their lowest level since June 2020. The unemployment rate increased sharply from 3.5% in July to 3.8% in August. After Initial claims for unemployment edged up to 230,000 in August.

What ASA members are saying:
“August was a strong month, but headwinds persist. Seeing competitors getting nasty with pricing as everyone has begun to compete for volume. Not seeing interest rates affect housing starts too much, but it also seems that there is an underlying fear of business slowing as the Fed considers more rate hikes. Washington has not completely killed the business, but they sure are trying hard.”

“Business is strong, but it is difficult to grow relative to the huge comparisons a year prior. This isn't a huge surprise, but it is difficult to offset the higher expenses across the business.”

“When comparing sales to same period through the remaining of 2023, we should show an uptick in business as sales fell starting in September 2022. Remainder of 2023 should continue to be strong...”