Vertical Research Partners/EW Survey Sees Steady Momentum in Early 2026

2025 was by any measure a wild economic year that recovered from the seismic impact of President Trump’s tariff announcement in April to end up strong.

According to the latest Vertical Research Partners quarterly report, distributor sales closed out calendar 2025 up a solid +4% on +1.5% volume growth and +2.5% growth in price.

VRP’s Low Voltage Electrical category, which covers most of the products full-line electrical distributors sell, led with +6% growth in Q4 2025, as the only category to post meaningful volume growth (+3.6%).  Nick Lipinski, a VP and equity analyst with Vertical Research Partners, said solid price contributions in the +2.5% to +3% range helped to offset flattish volumes in the survey’s Automation and Utility T&D categories. 

Few clouds on the horizon for 2026. Lipinski said most distributors see 2026 shaping up to be a broadly positive year. “Backlogs and pipelines are healthy, and quoting activity sounds generally strong,” he said in the report. “Tariffs are ‘baked into the cake’ at this point, and the gradual step down in interest rates is supportive at the margin.

“Data centers remain the largest ‘elephant’ to be hunted, but as we discussed in our own 2026 outlook, the industries in the lower leg of the K-shaped recovery are seeing signs of positive inflection. Some distributors with no direct exposure selling into data centers are seeing second and third derivative demand pulls from related power infrastructure.

“Outside of the single-family residential market, which is relatively small in the overall distributor mix, we heard positive outlooks on a number of verticals including general industrial, healthcare, water and multi-family housing. January reads did not point to a quick shot out of the gate but were generally solid. The prevailing sentiment sees
sequential improvement through the year absent any exogenous shocks, continuing the 2025 trend where growth accelerated to approximately +5.5% in the second half of 2025 H2 from approximately +3% in the first half of the year . For Q1 2026, distributors are forecasting sales growth of approximately +4.4% on average (median +5%).”

Lipinski added that full-line electrical distributors who responded to the survey reported “robust data center activity.” “While these types of larger projects are bolstering results overall, demand in other end markets has been relatively subdued but appears to be improving with expectations for broad-based growth in 2026,” he said.
Q4 end market review. Lipinski also said even those distributors without direct data center exposure are seeing tangential demand pulls from power plants or manufacturing of related infrastructure products. Power constraints a real concern but not yet affecting the outlook

“Some large previously announced semi fab facilities are finally getting underway and starting to show up in results,” he said. “Certain distributors reported strength in public spending (water, airports, convention centers). Commercial construction was mixed with office still broadly subdued, but there’s strength in institutional verticals such as healthcare. Activity at machine builders is improving, supported by lower rates.”