Electrical manufacturers say confidence is at an all time low

Weak demand has pushed confidence among UK electrical manufacturers to its lowest level since 2020 with signs that the heat pump market is beginning to stall.

BEAMA’s Q1 2026 Market Pulse found 51.7% of manufacturers expect demand to be the main constraint on output during the coming quarter.

The business confidence balance dropped 40 points from +12 in the final quarter of 2025 to -28 during the first three months of 2026. Demand has now overtaken supply chain disruption, raw material costs and labour availability as the industry’s biggest concern.

Companies supplying the construction sector reported the weakest outlook. Confidence among Building Electrical Systems manufacturers fell to -66.7 while the Heating & Ventilation sector recorded -50.

Both sectors reported flat quarterly sales as continued weakness in construction reduced orders.

Electricity Networks Infrastructure was the only sector to remain positive with a confidence balance of +11.1. It also recorded the strongest sales balance at +66.7 as investment in the UK grid continued.

However network equipment manufacturers warned that higher material prices and supply chain disruption were adding to costs.

Average factory capacity utilisation remained at 75% which is below the five-year average and the 80% last recorded in 2021. BEAMA said manufacturers have room to increase output but need stronger demand to justify further expansion.

BEAMA Chief Executive Officer Yselkla Farmer said: “Manufacturers continue to invest because they believe in the long-term future of electrification but the scale of investment depends on demand.

“For the first time in years we’re seeing the heat pump market stall an early warning sign that weak consumer uptake of electrification is starting to weigh on investment confidence across both heat technologies and electricity networks.”

Recruitment and investment intentions for the next 12 months both remained positive at +47 despite the fall in confidence. Longer-term investment intentions slipped two points to +68.

Plant and equipment was the leading investment priority followed by e-business including artificial intelligence and product development.

Manufacturers also reported rising prices for copper, steel, aluminium and brass linked to conflict in the Middle East and freight disruption.

Ms Farmer called for action to reduce the cost gap between electricity and fossil fuels, saying stronger consumer uptake would give manufacturers and network operators the confidence to invest.