Respondents continue to report increases month after month from the previous year. For the month of July, ASA respondents reported a 27.8% change in average sales for August 2021 versus August 2020. August 2021 versus July 2021, respondents reported a median sales increase of 6.3%. 

On a trailing 12-month basis, respondents reported median sales of 15.6 % in August of 2021 as compared to 12.3 % in July 2021 when compared to the 2020 data.

Inventories rose 30.2 % for August 2021 compared to a year ago, a notable increase from even July 2021 which was 27.3 %. The median three-months days sales outstanding was 40.3 days in August, a slight decrease from the previous two months which was reported at 40.9 days.

The number of respondents showing a decrease in gross margin is reported at 17.7 % in August as compared to July which was reported to be 19.4 %.

“We witnessed another surge in August after the numbers started leveling off. It’s hard to say how long this may last, but we will take it as long as it does. According to the feedback we are receiving, business remains strong for a lot of our members, sales are up, and inflation may be leading to some of the increase. Global supply chains, inflation and labor continue to be major challenges,” said ASA Business Intelligence Analyst Ayesha Salman.

Industrial PVF
ASA members doing business in the industrial PVF space reported an extremely steep growth of 41.4% in August compared to a year ago, which is significantly higher than July numbers that were reported to be 21%. Trailing 12-month sales for ASA industrial PVF distributors showed a sharp increase of 7.1% from the previous year. Average Inventories rose sharply by 24 %, while median change in ending inventory grew by 25.6%. The average days sales outstanding for that sector is reported to be at 47.1 days.

33.3% of ASA industrial PVF distributors responding to the survey reported an increase in the total number of full-time-equivalent employees compared to a year ago, while 66.7% of industrial PVF distributors reported an increase of gross margin percentage, and 25% reported a decrease as of Aug. 31, compared to the same reporting period a year ago.

Economic Indicators
GDP: There has been a great deal of conjecture involved in the GDP forecast this year. The second quarter started out robustly with almost 9.5% growth but that slowed to 6.5%. The third quarter outlook is for growth of 5.7% and now the expectation is for annual growth just shy of 6.0%. This is still extremely good growth for an economy the size of the U.S., and an economy that usually grows at around 2.5%.
Industrial production: IP declined a little this month as the impact of the supply chain chaos worked through the system. Hurricanes didn’t help much either. Industrial production moved up by 0.4% compared to the 0.8% hike last month. Manufacturing rose by 0.2% but mining fell by 0.6%. This is mostly gas and oil, and the closures forced by Hurricane Ida contributed to this issue. Utilities gained by 3.3% as warmer weather resulted in added demand to run those air conditioners.
Housing starts: Housing starts are still on a roll. The latest data shows a rate of 3.9% over July and that is a 17.4% increase over the rate noted in August of last year. Permits have also been showing strong signs of growth. They are 6.0% higher M/M from July and 13.5% over what they were in August of 2020. The ever-higher prices of homes have not yet slowed demand as there is still an acute shortage of homes in most cities and the mortgage rates remain near historic lows.
Home improvement retail: The prime motivation for remodeling activity is still a desire to sell a home, but sellers have not had to do much to market the home these days. The major motivation has been to convert parts of the home into offices or apartments for elderly relatives and children not yet ready to leave the nest. The biggest inhibitor has been the inflated prices for building materials and other commodities.
Manufacturing: The PMI numbers have come down from the levels reached in the summer but remain in the low 60s on a scale that indicates growth (when the index is above 50). The latest durable goods numbers had been expected to fall but they improved by 1.8%. The sense was that supply chain issues would create a bigger impact, but manufacturers are working around these inhibitors. The most affected sector has been automotive, but others have been struggling with parts as well.

Industry outlook
Looking forward over the next 18 months, the ASA sales forecast continues to be upbeat, knowing that interest rate increases could start toward the end of 2022. That could slow some residential construction activity. In the near term, supply chain disruptions and higher raw material prices continue to create uncertainty – despite generally upbeat growth expectations. 

The Delta variant of COVID remains a risk and could delay some additional spending in certain segments – especially commercial construction related to offices, high-density public gathering places, and big retail complexes. The Kastle Back-to-Work barometer is currently showing the 10-city average occupancy rates at just 34.4%. This continues to keep office utilization low across many sectors.