ASA distributors report another sales increase
Respondents to ASA’s monthly sales report registered a 15.4% change in average sales for July 2021 vs. July 2020. For the July 2021 vs. June 2021 period, respondents reported a median sales decrease of -5.7%.
On a trailing 12-month basis, respondents reported median sales of 12.3 % in July 2021 as compared to 13.5 % in June 2021 when compared to the 2020 data. Inventories rose 27.3 % for July 2021 compared to a year ago, a notable increase from even June 2021, which was 23.4%. The median three-month days sales outstanding remained the same in July as previously in June at 40.9 days.
The number of respondents showing a decrease in gross margin was 19.4 % in July as compared to June’s 20.8% total.
“The numbers show that the increase we are witnessing is beginning to level off, the sales are beginning to stabilize,” said Greg Manns, senior vice president at Industry Insights, ASA’s business intelligence partner. ”The economy witnessed a bulky expansion to make up for the shrinkage owing to the lockdowns last year. According to the feedback we are receiving, business remains strong for a lot of our members, however factors like shipping issues and labor shortages continue to be a problem, which is common across all industries right now. Inventories continue to swell due to a backlog of orders as well.”
ASA Business Intelligence Analyst Ayesha Salman added: “We will overcome these blips in time if we do not face any further lockdowns owing to the virus variants. Commerce has been affected globally. Businesses must try to think out of the box and come up with creative ways to solve problems.”
Industrial PVF ASA members reported a steep growth of 21% in July compared to a year ago, which is only a fraction lower than June number of 22.2% higher than the previous year. Trailing 12-month sales for ASA industrial PVF distributors showed a sharp increase of 6.9% from the previous year.
Average inventories rose sharply by 24.9%, while median change in ending inventory grew by 29.1%.The average days sales outstanding for that sector is at 47.1 days. Nearly 36% 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 71.4% of industrial PVF distributors reported an increase of gross margin percentage, and 21.4% reported a decrease as of July 31, compared to the same reporting period a year ago.
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.
Generally, most sectors remain in a strong growth position and as the leisure and hospitality sector experiences improvement in demand, that will boost spending. 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. Offsetting that is continued strength in e-commerce construction (warehouses, fulfillment centers, terminals and docks, etc.), health care, and some leisure and hospitality in regions of the country. Even educational spending is improving in many expanding residential markets in the south and southeast markets.
