Industrial distribution market weak, but may be stabilizing.(Industry News)

A survey of industrial distributors shows weak markets, but also a possible stabilization in the industrial sector based upon an uptick during the January-February time frame, according to Longbow Research analyst Eli Lustgarten.

Among industrial distributors surveyed, 21 percent indicated higher year-over-year demand in the January-February time frame versus 15 percent during the November-December time frame.

Survey results indicate that demand rebounded modestly in January-February as plants began the process of restarting at reduced levels following extended shutdowns in December-January, but remains soft overall, in-line with ongoing market weakness and weak economic data suggesting a continued contraction of the industrial economy.

Anecdotal evidence also suggests that maintenance, repair, and overhaul--MRO--demand slowed significantly over the period, as plants have been idled well beyond their normal holiday shutdowns in January and many plants are running at bare-bones levels.

Pricing moderated as declining raw material costs began to impact the distribution sector and demand slackened.

Inventory levels appear to have stabilized in February; the majority, 74 percent, of those contacted, reported inventories remain in-line with 2008 levels, versus 71 percent in November-December.

The negative outlook remains high, with 70 percent of those answering the survey suggesting a flat-to-down outlook for sales in February, the same findings as the last survey at the end of 2008, suggesting ongoing pessimism for 2009.

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Evidence from the survey results indicates that most likely the first half of 2009 will be weaker than originally anticipated.

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