Manufacturing Odds & Ends

Baird industrial survey indicates recession
The third quarter Baird Industrial Distribution Survey indicates "the industrial economy is heading into recession."

On average, respondents’ third quarter revenues were down slightly, with increased pricing offsetting unit volume declines. Over the next six months, respondents expect revenue growth to be both slower than the current quarter and well below the second quarter outlook.

The negative outlook is consistent with Baird’s outlook for declining unit volumes and positive but moderating pricing in the sector.   

Baird’s Industrial Distribution Research Team, led by senior research analyst David Manthey, collected feedback on third quarter results from nearly 300 independent and captive distributors with combined annual revenue in excess of $25 billion. Key survey findings include:

  • Slight revenue decline, deteriorating outlook – Third quarter revenue declined -0.1 percent on average, compared to an increase of +1.9 percent during the second quarter. Over the next six months, respondents now expect revenue to decline -0.3 percent year over year, compared to growth expectations of +2.5 percent in the second quarter survey.
  • Solid pricing – Respondents reported an average pricing increase of +2.9 percent compared to +3.6 percent in the second quarter. When considered in relation to total revenue growth of -0.1 percent, it appears unit growth declined during the third quarter.
  • Economy clearly decelerating: 77 percent of respondents believed that the economy was decelerating in the third quarter, while only 2 percent said it was accelerating.
  • Areas of strength – Over the next six months, distributors of gases, rental equipment and janitorial/sanitation products expect the most growth, while the most promising end markets appear to be utilities & mining, industrial manufacturing and medical.
  • The survey also indicated the credit crisis is starting to affect businesses, with greater impact expected in the fourth quarter.

Robert W. Baird & Co. Inc. is based in Milwaukee.

Sign up for BizTimes Daily Alerts

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

No posts to display