April 2021 Saw Exponential Sales
Average sales growth for HARDI distributors during April was an astounding 60%. Of course, this is comparing a temporary, stimulus-dollar-driven surge in demand to the COVID-suppressed economy of last spring. Sales declined -20% in the spring of last year, and it was the worst performance we had seen per our sales survey.
That said, the last five months have seen very strong sales growth, and we expect that rate to climb to even new record heights in May, as the May 2020 numbers were so adversely affected by the COVID pandemic. Last spring’s pause was a temporary one, and this current demand surge will be temporary as well.
It’s customary for personal consumption expenditures to decline during recession; however, during this one, enduring recession was thwarted by effective fiscal planning and programs– namely the government stimulus dollars, which led to a demand for goods. This worked to offset the weakness experienced in the way of personal consumption expenditures on services, which was constrained by risk of COVID infection. So though the industry is on the way to recovery from this pandemic, we still have a way to go.
The same pandemic-induced struggles that affected demand at HARDI distributors this time last year, also interfered in a major way with production and transportation schedules for various industries worldwide. Thankfully, the recession was brief, and the snapback in demand has been more intense than anticipated. As a result, many sectors of the economy are struggling to catch back up while the economy recovers at a rapid pace.
Some Supply Chain Challenges Remain
Though mask requirements have been lifted, the reality of COVID is still disrupting supply chains in some ways. Though the recently unavailable N95 masks are now no longer scarce, other products customers need will be throughout the summer.
One of the most shocking displays of the recent supply chain disruption was the incident in January 2021 when more than 60 cargo vessels were anchored off the coast of Southern California waiting for their opportunities to unload deliveries. This backlog problem has eased over time to 22 in the middle of March, and down to nine by the end of April. Signs show that things are evening out with time, as industry movement approaches some semblance of normalcy.
Furthermore, the Customers’ Inventories Index has been at historically low levels for the last 10 months, with many sectors of the economy still experiencing major shortages. If lead times are longer and delivery schedules remain somewhat unreliable, then it stands to reason that orders will be larger to compensate. As upstream pressure eases and as relief works its way downstream, order rates will cool off. Low levels of inventory suggest demand will stay elevated and that inflationary pressures will persist, but that strain is not evenly applied across all industries. The stress appears to be concentrated in a few industries.