BEAMA members reported a sharp slowdown in sales during the second quarter of 2026, even as investment and hiring intentions remained positive across the UK electrical manufacturing sector.
The trade association’s latest Market Pulse recorded an overall sales balance of +4 in Q2, down 19 points from +23 in the first quarter and from +29 in the final quarter of 2025. The balance measures the difference between manufacturers reporting improvement and deterioration rather than the percentage change in sales, making the two-quarter decline a measure of breadth across respondents rather than revenue lost.
Capacity utilisation also weakened. Average utilisation fell from 75% to 73%, matching the lowest post-pandemic level reported by the survey, while 40.7% of manufacturers said they were operating at 70% capacity or below. Within that group, 29.6% reported utilisation between 51% and 70%, and 11.1% were at 50% or below. Only 11.1% reported operating above 90% capacity.
The figures point to an uncomfortable mismatch between the manufacturing capability available and the orders currently reaching production lines. BEAMA represents companies supplying electrical products into energy networks, buildings, heat, transport, and related infrastructure, sectors expected to expand as electrification progresses. Its Q2 results suggest that the longer-term policy and infrastructure pipeline has yet to translate into consistently stronger near-term factory demand.
Construction-linked manufacturers recorded some of the weakest readings. Heating and Ventilation members reported a sales balance of -22.2 after a neutral first quarter, while Building Electrical Systems manufacturers remained positive at +33.3 but reported slowdowns and cancelled projects across new build and repair, maintenance, and improvement work. Business optimism in those two areas remained negative at -25 and -8.3 respectively.
Across the full BEAMA membership, business optimism improved from -28 in Q1 to -12 in Q2, but remained below every quarterly reading recorded during 2024 and 2025. The result leaves manufacturers planning for long-term electrification growth while carrying spare capacity through a softer order environment.
Yselkla Farmer, chief executive of BEAMA, said: “The growth we should be seeing from electrification is not reaching manufacturers. Businesses can produce more, but weak sales and unused capacity make it harder to invest with confidence.”
Investment intentions have nevertheless held up. The balance of respondents expecting to increase capital investment over the next 12 months rose from +47 to +51. Product improvement was the most frequently cited priority at 70%, followed by plant and equipment at 65%, while 57.9% identified e-business, including AI, as an investment area. Hiring intentions remained positive at +39, although members continued to report shortages of skilled engineers and high labour costs.
The five-year investment balance slipped only slightly, from +68 to +66. Many manufacturers therefore appear to be treating the current weakness as a demand problem rather than a reason to abandon expansion plans. A prolonged period of spare capacity could alter that calculation because underused plant reduces returns on earlier investment and makes additional equipment harder to justify.
The survey also records pressure from raw materials. Copper was the most frequently cited concern, followed by steel, brass, aluminium, and PVC resin, while some manufacturers again reported difficulty sourcing chips, semiconductors, and microprocessors. Respondents linked some cost increases to disruption in Middle East shipping, and BEAMA has also raised concerns about the effect of UK steel tariffs on domestic product manufacturers.
UK manufacturing output has recently shown signs of recovery, including growth in computer, electronic, and optical products, but aggregate production figures can conceal weak utilisation in particular industrial supply chains. Electrical manufacturers tied to construction, heat, and grid investment can have very different order cycles from exporters or pharmaceutical producers.
BEAMA argues that demand now needs to catch up with policy ambition, particularly across heat electrification, buildings, and electricity networks. Farmer pointed to construction weakness, planning and connection delays, and the relationship between electricity and gas prices as factors affecting customer decisions. The production signal is already visible: manufacturers have labour, equipment, and investment plans available while a significant share of installed capacity is sitting idle.
For the remainder of 2026, the key measure will be whether stronger investment intentions turn into committed orders before spare capacity starts feeding back into manufacturers’ own capital plans. The sector is not reporting an absence of willingness to invest; it is reporting that the demand expected from electrification is arriving too slowly to keep existing production assets fully occupied. That gap matters because prolonged underutilisation can weaken the case for the very factory upgrades and recruitment manufacturers say they still intend to pursue.
