Industrial demand may be slowing

Is industrial demand still too hot for supply chains to handle, or starting to show signs of slowing down? As a volatile earnings season draws to a close, clarity is in shorter supply than semiconductors.
Most manufacturers are still growing sales on a headline basis, but almost all that momentum in the first quarter came from price increases. Industrial companies say that reflects the extent to which supply-chain challenges continue to thwart their ability to get product out the door. But analysts and investors
are increasingly concerned that parts shortages and
logistics snarls may be masking — or perhaps exacerbating — the beginnings of a deterioration in underlying demand.
Meanwhile, inflation has gotten worse, crimping margins and forcing companies to push through yet more price increases that at some point will catch up with them if they haven’t already. Covid lockdowns in China and Russia’s invasion of Ukraine introduced new variables in an industry that definitely didn’t need more challenges.
There is no evidence that demand is falling off a cliff: Fastenal Co, a large distributor of factory floor odds and ends based in Winona, Minnesota, said this week that average daily sales in April grew more than 20% compared with a year ago, up from a 19% pace in March. Amid concerns about a consumer slowdown, sales at pool equipment maker Hayward Holdings Inc increased 23% in the first three months of 2022, a gain that was all the more remarkable considering revenue jumped 96% in the year-earlier period.
Stanley Black & Decker Inc said it would have shipped $200 million of additional professional power tools in the first quarter if
it weren’t for continued constraints on electronic component availability.
Air conditioner maker Carrier Global Corp anticipates the disruptions to its manufacturing operations in the Shanghai region from Covid lockdowns will cost it $100 million of sales in the second quarter. But the company expects this to be a temporary blip that it will make up for as the year progresses.
Chip shortages and inflation weighed on results at Rockwell Automation Inc and forced a big cut to its full-year outlook.

—Bloomberg