Distributors See Steady But Small Increase in Q2 2025 Revenues in EW/VRP Survey
Distributors in the quarterly Electrical Wholesaling/Vertical Research Partners survey on electrical market business conditions are expecting a rather modest +2.1% increase in sales in 3Q 2025, following a pedestrian +3.5% increase in 2Q 2025 sales.
Nick Lipinski, a VP and equity analyst with Vertical Research Partners, Stamford, CT, said pricing was responsible for much of this increase, according to survey responses from more than 30 electrical, automation and utility distributors. “Volumes were steady sequentially with modest +0.4% growth, while pricing picked up to +3.1%, he said. “The general pickup in pricing reflects some early tariff-related movements from OEMs (electrical manufacturers), though it sounds like a 50/50 split of manufacturers who have implemented actions versus those who are waiting to see how the tariff landscape ultimately looks when the dust settles.
“Growth in Q1 2025 came in slightly short of the +5% level distributors were anticipating at the time of our Q1 2025 survey in April” Lipinski said that by category, automation distributors had the biggest revenue increase in 2Q 2025 with +4.8% growth driven by a +2.9% increase in price and a +1% increase in volume. Electrical distributor respondents saw the most robust pricing increase at +3.5%, but they were the only respondents to post a volume decline in Q2 (-0.7%). Utility distributors had solid results with+ 3.7% growth based on a +1% increase in volume and +2.7% in price.
TARIFFS & INTEREST RATES
Tariffs and interest rates were top of mind for respondents, said Lipinski. “Interest rates and tariffs are generally viewed as roughly equivalent constraints on growth, though not necessarily driving demand destruction at this point,” he wrote in the 2Q 2025 VRP report. “During the post-COVID recovery years, distributors were consistently conservative in their forward estimates. In 2025, they have been slightly optimistic in their projections, with tariff-related uncertainty likely acting as a check on ‘animal spirits.’ Some distributors pointed to the possibility of some pre-buy stocking up ahead of tariffs, but reported inventory levels appear relatively rightsized.
“We heard of select regional softness in day-to-day stock-and-flow business, though this type of commentary was not universal. Data centers continue to bolster results in aggregate, with order sizes now regularly running at multiples of typical historical rates. The pipeline appears robust and is providing enhanced visibility out several years. The resilience of smaller project activity in the absence of tariff or interest rate relief is a clear watch item for the third quarter and the balance of the year.”
Distributor respondents’ anecdotal comments reflected some mixed opinions on the impact of tariffs to date. “A lot of uncertainty due to the fluctuating tariffs,” wrote one distributor, while another respondent said people “have become numb to tariffs.” They have seen some price increases from manufacturers, with one distributors saying, “"Price is 50/50, some OEMs(manufacturers) holding off, some are passing it along as a separate line item."
Another respondent said, “It looks like American based companies are putting through price increases, while Europeans are putting line item surcharges to be able to pull back."
Distributors’ forecasts for the rest of the year were also mixed, with one respondent saying they were optimistic about the second half of the year, but another saying there were plenty of large projects in the pipeline, but not much smaller business. “There are a lot of elephants out there, but not so many squirrels and possums.”