Sure there are a lot of construction cranes swinging and news of more open jobs than unemployed people. But before concluding the economy must be booming, perhaps we should consider the latest financial results from Fastenal Co.
The company remains a top performer, but that was not the headline off Fastenal's second-quarter earnings report. "Here come the earnings disappointments," said Bloomberg, in its analysis article following the release of its financial results.
Sales increased just under 8% for the quarter, 7% in June. "After eight quarters where quarterly growth averaged 12.9%, our current rate is clearly disappointing," Chief Financial Officer Holden Lewis told investors and analysts on last week's quarterly conference call.
So as of last week, there seems to be more than enough reason to say manufacturing really has slowed down.
Fastenal reported sales of $1.37 billion in the quarter, but the company's size is not why investors follow it so closely. How it's doing turns out to be a great indicator for how a broad slice of the industrial economy is doing.
Fastenal is still known for selling nuts, bolts and screws. But it has grown beyond its roots to also include lots of other industrial products, such as safety products — yet still sticks to things that get consumed, not capital equipment that might be around for a while.
The Winona-based company has evolved how it sells, too, and now has lots of industrial vending machines inside its customers' facilities. In fact, it just passed a major milestone, placing its 100,000th vending machine at a firetruck factory in Wisconsin operated by Oshkosh Corp., one of the first users of Fastenal's clever machines.
You can see the appeal of these vending machines for customers, as items can be bought only when they are really needed. No need to order, no need to stock up. So when Fastenal sales lose momentum, that means that customers might have cut the production rate or idled a manufacturing line.