Trends Survey - 2025 Q1
Highlights
Business optimism edged up
Investment intentions hits 4-quarter high
Capacity utilisation continue to fall
Wages continue to dominate cost impact
Summary
The BEAMA Trends Survey for Q1 2025 presents a nuanced economic outlook for the UK’s electrical and manufacturing sectors. Business confidence saw a modest uptick of 2 percentage points from a six-quarter low, with 19% of firms expressing reduced optimism, 27% showing increased optimism, and 54% reporting no change in sentiment. The sales balance retained much of its strength, dropping only 7 points from the three-year peak recorded in the prior quarter. However, the unit costs balance reached a six-quarter high, driven by persistent rises in wages and energy prices, though the increase was moderate compared to the previous quarter.
Investment intentions for the year ahead in Q1 2025 soared to 51.4%, marking a robust start to the year. Businesses demonstrated strong confidence in expanding capital expenditure, particularly in customer research (71%), plants and equipment (71%), and structures (58%). This optimism exceeds the 2024 average of 42.3% and surpasses most historical Q1 figures. Over a five-year horizon, investment intentions surged to 78%, with a strong focus on product improvement and plants/equipment (95% of firms for each). Investment intentions in research and development (R&D), however, fell to 11%, a shift from its dominance in the previous 12 months investment priorities.
Hiring intentions in Q1 2025 reflect a strong, positive start, with a net balance of 46% of firms planning to increase recruitment, recovering from a softer Q4 2024. This figure outperforms the 2024 average and ranks among the strongest quarters historically. The average time to fill engineering vacancies rose by one month to 4 months in Q1 2025, with R&D roles taking 5.8 months and warehouse logistics positions requiring 2.9 months.
Export performance in Q1 2025 remained largely stable compared to the previous quarter, with Europe continuing to be the primary destination for trade and source of raw materials. The export balance fell to 0% from 6% in Q4 2024, with firms citing economic conditions as the main factor impacting export activities. Average capacity utilisation declined by 3% to 73%, as sales softened slightly from Q4 2024, with 62% of firms identifying demand as the primary constraint on output. To address demand fluctuations, firms are adopting strategies such as capacity expansion (13%), order prioritisation (11%), and outsourcing production (11%).
Overall the BEAMA Trends Survey Q1 2025 reveals a mixed but broadly optimistic outlook for the UK’s electrical and manufacturing sectors. Business confidence improved slightly, though tempered by rising unit costs due to wage and energy price pressures. Investment intentions are notably strong at 51.4%, with significant focus on customer research, plants/equipment, and structures, and a five-year investment outlook reaching 78%, driven by product improvement and infrastructure. Hiring intentions are robust at 46%, despite longer recruitment times for engineering roles. In contrast, exports stagnated with a balance of 0%, reflecting economic challenges, while capacity utilisation dipped to 73%, constrained by demand. Firms are responding with strategies like capacity expansion and outsourcing to manage output. Overall, Q1 2025 shows strong domestic investment and hiring optimism, but export performance remains a weak spot, potentially requiring policy support to boost trade.
Key Indicators
Key Indicators - 2025 Q1 Balances
- Optimism balance edged up 2% from previous quarter to 8%
- Sale balance dropped 7% down from 3-year high and still remained strong in 2025 Q1
- Exports balance declined by 6% to zero indicating flat sales.
- Unit cost balance crept up 2%
- Hiring intentions balance dropped by 13% from previous quarter.
- Exchange rate impact on cost balance dropped by 21% from previous quarter to 13%
Source: BEAMA
Key Indicators - Investment Intentions
On balance,
- 11% of companies plan to increase Research & Development investment, down 2% from previous quarter.
- 65% of companies aim to boost spending on E-business (robotics, AI, e-commerce), up 4% from previous quarter.
- 71% of companies expect to ramp up investment in Plants & Machinery;up 21% from previous quarter.
- 71% of companies intend to increase spending in Customer Research; a jump by 21% from previous quarter.
- 33% of companies looking to increase investment in Product Improvement; up 3% from previous quarter.
- 58% of firms anticipate boosting spending on Structures; a jump by 22% from previous quarter.
Source: BEAMA
Business Optimism
Business confidence rose slightly by 2 percentage points from a six-quarter low, with 19% of companies feeling less optimistic, 27% displaying greater optimism, and 54% noting no change in sentiment. The net balance of responses climbed to 8% in Q1 2025. On an yearly basis, business optimism remains at its lowest level since 2022.
Optimism - Quarterly
Optimism - Yearly
Source: BEAMA
Open Comments
Comments - Past 4 Quarters
- Positive Trends:
- Growth in Core Sectors: Sales volumes have improved from the previous quarter, with growth in core product lines and strengthening network sectors showing increased certainty.
- New Market Opportunities: A new product launch has opened a promising market segment, with early signs indicating strong growth potential.
- Stabilising Conditions: The construction sector dip appears to be levelling out, and the recent political stability with the new Labour government is fostering hope for overcoming pipeline constraints.
- Government Engagement: Increased government engagement in key sectors and resumed policy reviews, with delayed announcements now progressing, signal potential for clearer direction.
- Anticipated Investment: Hopes are high for increased investment in building and infrastructure projects under the new government, particularly in building electrical projects, though benefits may take around eight months to materialise in sales.
- Challenges and Concerns:
- Market and Economic Uncertainty: A significant market drop over the past 3–4 months, coupled with macro-economic uncertainties, is complicating business projections. Global economic turmoil and lack of progress in peace are reducing consumer and business confidence.
- Pricing and Cost Pressures: Despite lower raw material costs, high demand is driving inflationary price increases, compounded by wage rises above inflation and doubled shipping container costs over the past year.
- Regulatory Ambiguity: Uncertainty surrounds the regulatory environment, with postponed regulations, lack of clarity on government policies, and perceptions of ineffective initiatives (e.g., FHS and Hems) lowering morale. Constant changes to specifications and lack of enforcement allow non-compliant products to persist.
- Sector-Specific Challenges: Slowing EV sales growth due to diverging European standards and country-specific regulations, alongside UK grid connection issues, are stalling renewable projects and deterring investment, impacting net zero targets.
- Supply Chain Issues: The UK construction sector faces reduced demand and payment challenges for suppliers, driven by political policies, affecting the entire supply chain.
- Global Risks: Businesses are bracing for potential global slowdowns due to tariff changes and factoring in security risks from possible future attacks.
- Summary
- The UK business landscape shows cautious optimism driven by improved sales volumes, growth in core product lines and networks, and a new product launch opening promising market segments. Hopes for increased government investment in infrastructure and greater policy clarity under the new Labour government further bolster this outlook, though benefits may be delayed. However, significant challenges persist, including a recent market drop, inflationary pressures from high demand and wages, and rising shipping costs. Regulatory uncertainty, grid connection issues hindering net zero goals, and slowing EV sales in Europe add complexity. Political and financial instability, particularly global trade concerns, alongside supply chain struggles and security risks, temper optimism, creating a mixed outlook with growth potential overshadowed by substantial uncertainties.
Source: BEAMA
Sales
Sales balance maintains the momentum from previous quarter receding only 7 points from the 3-year high reached in previous quarter. Comparing to other Q1 balances, it is the highest since 2021 Q1. It is too early to call but strong start for 2025.
Sales - Quarterly
Sales - Yearly
Source: BEAMA
Unit Cost
Cost - Past Quarter
Moderate increase of unit cost balance in Q1 2025 compared a jump in the previous quarter but the 40% marks 6-quarter high, the highest since 2023 Q2. Still below long time average and 2024 Q3 seems to be the inflection point of the downward trend. On yearly basis, 2024 marked the lowest point since the pandemic-high prices and and appears to be on the rise again with erosion of margins on profit.
Cost - Quarterly
Cost - Yearly
Cost - Expectation
The expectation of cost increases in the second quarter of 2025 is broadly in line with the previous quarter, with 40% of firms anticipating a rise in costs. This highlights concerning upward pressure driven by rising labour cost, energy prices, and tariffs amid the current economic climate.
Cost Expectation - Quarterly
Cost Expectation - Yearly
Cost Impact
Breakdown
In 2025 Q1 the impact of unit cost were as follows:
- Wages and Salaries on unit costs was the most significant, affecting 88% of firms, an 7% increase from 2024 Q4.
- Energy costs impacted 71% of firms, rising 10% from Q4 ,
- raw material costs affected 52%, down 4% from the previous quarter.
- fuel costs impacted 42%, showing a rise of 31% from Q4
- and exchange rate fluctuations influenced 13% of firms, marking a 18% drop from Q4,
Source: BEAMA
Wages & Salaries
Energy
Raw Materials
Fuel
Exchange Rate
Source: BEAMA
Output Constraint
Output Constraint - Breakdown
For on constraints on output in 2025 Q1 :
- demand remained the primary constraint on output for 62% of firms, up 5% from Q4.
- labor availability jumped 15% to 19% from previous quarter.
- components and material supply as a constraint dropped 6%, from previous quarter to 8%.
- capacity constraints impacted 4% of firms, reflecting a 7% drop from Q4.
- raw materials and financial constraints recorded zero percentage of firms.
Output Constraint - Quarterly
Source: BEAMA
Capacity Utilisation
The average capacity utilisation dropped 3% to 73%, reflecting a subdued performance compared to 2024 Q1 as demand weakened.
In 2025 Q1:
- 15% of firms operated at over 90% capacity, down 10% from Q4.
- 42% of firms utilised between 71% and 90% capacity, up 2% from Q4.
- 39% of firms operated within the 50% to 70% range, up 13% from previous quarter
- 4% of firms functioned below 50% capacity, down 5% from Q4
Capacity Utilisation - Breakdown
Capacity Utilisation - Quarterly
Capacity Utilisation - Yearly
Source: BEAMA
Surge Demand Strategy
At times, demand surges exceed supply, prompting firms to adopt various strategies to manage these fluctuations.
In 2025 Q1:
- 38% of firms reported no surge in demand, a 15% increase from Q4.
- 13% of firms expanded capacity to cope, relatively unchanged from previous quarter.
- 11% of firms managed demand by prioritising orders, marking 8% decrease from previous quarter.
- 11% of firms outsourced production, a 3% increase from Q4.
- 9% of firms relied on strategic partnerships, showing drop of 2% from previous quarter.
- 7% of firms utilised reserved capacity, relatively unchanged from Q4,
- 4% of firms each introduced alternative products and shift scheduling
- 2% of firms stopped accepting orders, an decrease of 1% from Q4.
Source: BEAMA
Jobs - Vaccancy Filling
In 2025 Q1, the average time to fill engineering job vacancies climbed up by a month to 4 months. The breakdown of the different skill sets are as follows:
- R&D roles took 5.8 months to fill, an increase from 3.7 months in Q4.
- Sales & Marketing positions took 4.0 months to fill up 0.5 months from Q4.
- Field engineering vacancies took 3.9 months, an increase from 2.3 months in Q4.
- Production roles required 3.1 months to fill, showing 0.7 months increase from previous quarter.
- Warehouse logistics positions were filled in 2.9 months, also showing an increase from 2.0 months in 2024 Q4.
Source: BEAMA
Jobs - Average Time
Sales & Marketing
R&D Engineering
Production Engineers
Field Engineers
Warehouse Logisics
Hiring Intensions
Hiring intentions in 2025 Q1 indicates a strong, optimistic start to the year with 46% on balance intend to hire more, a rebound from the Q4 2024 softness. Compared to previous years, 2025 begins on a high note, with hiring intentions surpassing the 2024 average and matching some of the strongest quarters.
Quarterly
Yearly
Source: BEAMA
Exports - Past Quarter
2025 Q1 recorded zero balance for exports, indicating a neutral position with no net increase or decrease in export activity from previous quarter. 17% of firms reported an increase, 17% reported a decrease and 65% reported no change in exports levels from previous quarter. On yearly basis, exports balance has been below the long-time average for 3 years in a row.
Exports Quarterly
Exports Yearly
Source: BEAMA
Exports - Key Factor
Approximately 30% of firms did not engage in exporting, and among those that do, key factors likely to limit exports in the year ahead in 2025 Q1:
- economic conditions are still the primary factors expected to influence exports in the coming year, with 34% of firms citing this in Q1, a 13% increase from Q4.
- 17% of firms pointed to global competition, an increase of 10% from Q4.
- 13% mentioned various other factors, an increase of 3% from previous quarter
- 4% mentioned exchange rate fluctuations, an increase of 3% from previous quarter
Some of the points raised among the Other factors include: - Demand - Emerging technology - Tariffs - The fall out from Brexit
Source: BEAMA
Exports - Destination
- Europe remains the leading export destination, with 85% of firms in Q4, an increase of 4% from previous quarter.
- North America, Asia and Austral recorded 5% each, in 2025 Q1
Source: BEAMA
Exports - Destination Trends
Imports - Key Source
Sourcing raw materials and components is a crucial part of the supply chain, and in the 2025 Q1:
- 55% of firms cited Europe, unchanged from previous quarter.
- 36% of firms identified China, marking a 7% increase from previous quarter.
- 9% of firms mentioned Asia (excluding China), 2% down from quarter.
- 3% of firms cited South America and Australia each, having not been mentioned in Q3.
- no mentions of North/South America, Australia and Africa in 2025 Q1
Source: BEAMA
Supply Chain
In the 2025 Q1 survey, firms were asked if they had experienced reduced availability or rising prices of raw materials and components. The key findings are below:
Reduced Availability:
- Majority Unaffected: Most firms reported no impact on material availability.
- Specific Shortages: Some firms cited recycled PVC, polymer ingredients being in short supply.
- Supply Chain Delays: No mentions.
Rising Prices:
- Metals: Copper and steel were frequently mentioned.
- Electronics: Some firms highlighted semi-conductors and other electronics, while one noted that chip prices remained stable.
- Energy: A few firms pointed to rising energy costs.
- General Impact: Some respondents stated that “pretty much all” materials had seen price increases, while others reported no significant changes.
Availability - 4 Quarter comments
Prices - 4 Quarter Comments
Source: BEAMA
Investment - 1 Year Ahead
The average investment intentions for the year ahead in 2025 Q1, 51.4% reflects a strong start to the year, with businesses showing significant confidence in expanding capital expenditure, particularly in customer research (71%), plants/equipment (71%), and structures (58%). This optimism surpasses the 2024 average (42.3%) and most historical Q1 values, aligning with strong hiring intentions (46). The focus on market insights and infrastructure suggests a strategic push for growth, though the decline in R&D investment (11%) raises questions about long-term innovation. Sustaining this momentum will depend on economic stability* and supportive policies, with subsequent quarters critical to assessing the trajectory of investment growth in 2025.
1-Year Ahead Breakdown
Over the next 12 months, investment intentions breakdown among firms indicate:
- 71% intend to invest in customer research, up 21% from previous quarter.
- 71% expect to allocate more funds to plants and equipment, reflecting another 21% rise from previous quarter.
- 65% plan to boost spending on e-business, marking a 4% increase from previous quarter.
- 58% plan to invest in structures, showing a 22% increase from previous quarter.
- 50% aim to expand investment in export market development, a 6% increase from previous quarter.
- 33% anticipate spending on product development, a 3% increase from Q4.
- 11% expect to invest in research and development, down 2% from Q4.
Source: BEAMA
1-Year Ahead - Quarterly
Average of all the 7 investment categories
1-Year Ahead - Yearly
Average of all the 7 investment categories
Investment - 5 Year Ahead
5-Year Ahead - Breakdown
In 2025 Q1 the average investment intentions over the next five years increased by 15% from Q4, and the breakdown are as follows:
- 78% plan to increase spending on e-business, a 8% rise from Q3.
- 75% intend to invest in plants and equipment, marking a 11% decline from Q3.
- 73% expect to allocate funds to product development, reflecting a 12% decrease from Q3.
- 68% plan to invest in research and development, down 17% from Q3.
- 54% anticipate investing in structures, a 14% drop from Q3.
- 52% expect to maintain their investment in customer research, remaining unchanged from Q3.
- 41% aim to expand spending on export market development, a significant 32% decrease from Q3.
Source: BEAMA
5-Year Ahead - Quarterly
Average of all the 7 investment categories
5-Year Ahead - Yearly
Average of all the 7 investment categories
Investment - Past 12 Months
Past 12 Months - Breakdown
Past 12 Months - Quarterly
Average of all the 7 investment categories
Past 12 Months - Yearly
Average of all the 7 investment categories
E-Business - Yearly
Plant & Equipment - Yearly
Structures - Yearly
R & D - Yearly
Export Markets - Yearly
Customer Research - Yearly
Investment - External Factors
In the 2025 Q1 survey, external factors likely to influence investment decisions include:
- Supply and demand: Cited by 54.1% of firms, reflecting a 1% increase from previous quarter.
- Policies and regulatory constraints: Identified by 29.7% of firms, 5% decline from 2024 Q4.
- Technological advancements: Noted by 16.2% of firms, showing a 4% increase from previous quarter
Source: BEAMA
About Survey
The BEAMA Trends Survey, conducted quarterly, provides insight into current and expected future industry trends. The survey analysis includes the use of balance of responses to assess survey results and identify trends. Balance of responses is a percentage of firms reporting an increase less firms reporting a decrease. No weighting is given to allow for the extent of the change of the size of the firms involved.
\[ Balance = firms\,reporting\,an\,increase \quad - \quad firms\,reporting\,a\,decrease \]
Balance Calculation Illustration
Survey Respondents
The 2025 Q1 survey received 34 responses. The average turnover of firms who participated in the survey was 61 GBP million with average labour force of 200 or less.
Respondents By Sector - 2025 Q1
By sector,
- 35% of companies were in Heating & Ventilation, a 3% rise from the prior quarter,
- 32% from Building Electrical Systems, unchanged from previous quarter,
- 21% from Electricity Network Infrastructure, down 5% from previous quarter,
- 9% from Smart Energy Systems and
- 3% from Electrical Transport Systems
Source: BEAMA
Contact
For further information please contact:
Emmanuel Amoakohene
BEAMA Ltd
Rotherwick House, 3 Thomas More St, London, E1W 1YZ
T: 020 7793 3034
E: stats@beama.org.uk
Comments - 2025 Q1