Distributor Respondents to EW/VRP Survey See Improving Business Conditions in 2026

Distributors had a strong 3Q 2025 and are expecting improving economic conditions into 2026, according to the latest Electrical Wholesaling/Vertical Research Partners quarterly business conditions survey.
Nick Lipinski, a VP and equity analyst with Vertical Research Partners (VRP), said electrical, utility and automation distributors who responded to the survey were challenged by “an increasingly bifurbicated landscape,” but in total saw their 3Q sales up approximately +6.9%. Sales for electrical distributor  respondents were in total up approximately +7%. On average, distributor respondents are expecting sales to be up +3.9% in 4Q 2025.
Lipinski said in his analysis of the survey results that pricing was relatively stable sequentially at approximately +3%. "While a pickup in pricing may have been expected as tariff-related actions flow through, we suspect the similar sequential result reflects the tactical nature of price increases, as well as the strategic use of surcharges,” he said.
He added that in addition to the solid pricing contribution, distributors generally pointed to a release of pent-up demand from still healthy backlogs as tariff uncertainty subsided.
“Data centers remain the primary driver of activity, with hyperscale demand notably robust and no signs of a slowdown,” he said. “Strength in this vertical favors larger distributors who can meet the increasing order sizes. Outside of DCs, the industrial and construction demand environment remains relatively subdued.
“There was a wide range of results reported, with the extremes ranging from strong double-digits on the upside to significant double-digit declines on the downside.
“There was some degree of deceleration in September, mirroring the slowdown suggested in chemical and transportation markets. However, this was not widespread, and did not seem overly concerning to distributors in terms of influencing the forward outlook. It appears to have been more of a modest sequential step down after robust activity over the summer. The general view is that trends in Q3 will continue through year end, and 2026 should see incremental improvement.”
Lipinski also said there were clear regional and industry sector divergences in the distributor commentary in Q3, and that distributors large enough to participate in the data center end market (particularly hyperscale) are seeing a continued robust demand environment that actually seemed to accelerate in the quarter.
“The data center market in the United States has grown to the point of parity with office construction in dollar value. Further, the electrical intensity in a data center is much higher than for an office building or any other nonresidential application. This is contributing to the bifurcation of results, with data center strength more concentrated in larger distributors versus general construction activity, which is more relevant for a broader swath of players.”
He added that outside of data centers, the general industrial and construction landscape is relatively subdued, although there were pockets of strength in food and beverage.

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