As reported last month, respondents to ASA’s monthly sales survey reported a median sales decline in year-over-year sales for the first time in more than two years.
Fast forward a month, and Industry Insights, ASA’s business intelligence partner, notes it is encouraging to see respondents bounce back in May, reporting a median sales increase of 5% for May 2023 vs. May 2022.
The news is even better on the month-to-month tracker (May 2023 vs. April 2023) where distributor respondents reported an even greater increase in sales of nearly 13%.
Year-to-date sales through May 20203 increased 7% compared to 2022 totals. Additionally, on a trailing 12-month basis, respondents reported double-digit growth of nearly 12% with half of respondents reporting trailing 12-month sales growth between 6% to 19%.
Inventory remained relatively flat for May 2023 vs. May 2022, edging up 0.2%. The median three-month average days sales outstanding dropped to 39 days in May.
Industrial PVF
The news was also highly positive for industrial PVF distributors. Respondents to the survey doing business mainly in the industrial PVF space reported a median sales increase of 17.9%. Calendar year-to-date, PVF distributors reported a 7.6% increase, while the trailing-12-month total stood at 12.7%. Inventory (comparing May 2023 vs. May 2022) for PVF distributors checked in at a 1.5% increase, while the 90-day days sales outstanding checked in at 47.2 for May.
On the gross margin percentage front, 69.2% of industrial PVF distributor reported that number was up comparing May 2023 vs. May 2022 numbers, while 46.2% reported that number being up on a year-to-date basis. For year-to-date profit before taxes, 61.5% of PVF distributors reported an increase.
Economic indicators
The "real" GDP growth for the first quarter of 2023 was revised up from 1.1% to 1.3%. Total wholesale sales for April contracted -3% year-over-year, while inventories grew 6% vs. the prior year. The Department of Commerce recently started reporting "real" wholesale sales to provide a more accurate picture of inflation-adjusted growth.
In a sign that inflation is beginning to calm, "real" wholesale sales growth was essentially flat for April. Housing permits and starts both reported solid increases in May vs. April, with housing starts reaching a level we haven’t seen since April 2022. The unemployment rate increased from 3.4% in April to 3.7% in May as initial claims for unemployment remained near 240,000 for the third consecutive month.
What ASA members are saying
"Business levels are holding nicely, and gross profit is actually up in comparison to the first five months of 2022."
"Business slowed down in April and May, but that may have been due to moderate weather. June has seen an increase in sales and customers are getting busy again."
"Invoiced sales have hit a bit of a lull, but future orders remain strong, and I am hopeful for a strong finish to the year."
"May rebounded nicely — even without the extra selling day, we were up. It’s all price, but it was a relief to see business bouncing back vs. a soft April."
"Open orders and GP% are getting squeezed. We are quoting more than ever, but the margins are lower, and the jobs aren’t going."
"This has been a tough year to understand. We knew that demand would be softer, which it has been, however, we are not confident if this is a result of the markets slowing or an incredibly wet spring. Most of our larger clients remain excited for the year, so we are anticipating a strong second half. Only time will tell."
"Trying to right-size inventory in order to prep for a slower Q3."
