ASA Distributor Members Reports Business is Strong, but Not Record Setting

ITASCA, Illinois — Respondents reported a median sales increase of 11.5% for February 2023 vs. 2022. Year-to-date sales through February 2023 were up 14.5% vs. 2022.

Industry Insights, which produces the ASA monthly sales report for ASA distributor members, says that while inflationary pressures are beginning to slowly soften, the year-over-year comparisons should continue to be viewed with caution. On a month-to-month basis, respondents reported a decline in sales of -5% for February vs. January.

It is encouraging that half of the respondents reported TTM sales growth between 9% to 25%. Inventory rose 7% for February 2023 vs. February 2022. The median Three-Months Average Days Sales Outstanding remained near 41 days in February.

“February continued the solid start to 2023 with double digit sales growth of over 11%.” Industry Insights Senior Vice President Greg Manns said. “While this is good news, much like the overall economy, we are beginning to see signs of slowing growth and even declines in some areas. As we go to press, we are amid the SVB bank failure and its fallout. It will be interesting to see if the Fed continues its aggressive rate increases. While inflation is slowing, it is nowhere near where the Fed wants it to be. The current tightening is already creating a strong headwind for an already soft housing construction market.”

Economic Indicators
The "Real" GDP growth for the 4th quarter 2022 was revised down from 2.9% to 2.7%. Total wholesale sales for January grew 3.6% year-over year, while inventories grew 16% vs. the prior year. The Department of Commerce recently began reporting "Real" wholesale sales to provide a more accurate picture of inflation adjusted growth. "Real" wholesale sales growth was essentially flat for January. Housing permits and housing starts reported a surprising increase in February, largely due to an increase in multi-family housing. Both starts and permits remain well below their 2022 levels.

What ASA distributor members are saying:
Some comments from ASA member distributors that participated in the monthly sales report:

• “Business remains robust - we are not setting records, but we continue to comp Y.v.Y nicely and hold onto some of the strong gains we have experienced over the past 24 months. We all keep waiting on the other shoe to drop, but so far, everything continues to trend nicely. We are certainly watching headcount much tighter in preparation for some weakness, especially as the talent pool seems to be getting stronger.”
• “There has been a definite slowdown that start in the 4th quarter of 2022. Interest rates and general economic conditions have had an effect. For California, weather has had an impact like never before.”

To access the full ASA monthly sales report and to access archived reports, click here.