Electronics manufacturers have been hit by a decline in sales, according to new research – reflecting a drop in business confidence due to the war in Iran.
Small and mid-sized firms in the category saw their average sales revenue fall by 22% in the first quarter of the year, compared to a 39% drop across all manufacturing categories.
Average sales revenue only reached £358,148 – in contrast to the previous quarter when it stood at £460,993. It was also down 6% year-on-year. This represented a smaller decline than electrical and electronic component manufacturers, whose quarterly sales revenue dropped by 46% to £151,503.
The figures appear in the latest manufacturing report from inventory management specialist Unleashed. Its quarterly report is based on data from more than 600 UK firms using the software, across 12 manufacturing categories such as food and drink, clothing and fashion, and construction.
Despite a general decline in sales, electronics and telecommunications manufacturers ranked third out of 12 categories analysed, suggesting that demand for electronic equipment has remained more stable than in many discretionary manufacturing sectors.
Manufacturers in the furnishings category fared worst, with revenue plunging by 61% from £239,280 to just £92,410. Construction industry suppliers were next, seeing their revenue falling by more than half (57%) from £486,638 to £209,662.
Weak sales were compounded by a contraction in purchasing and stock on hand across all manufacturing categories QoQ, suggesting that buyers are increasingly cautious about the months ahead.
The value of purchase orders (POs) was up by an average of 5%, while stock on hand declined by around 14% to £169,733. Similarly, profitability was down from 42% to 27% – the lowest since Q3 of 2022. Lead times rose to 16 from 14 QoQ.
Commenting on the figures, Joe Llewellyn, GM of ERP Small Business at The Access Group, the parent company of Unleashed, said: “Tensions in the Middle East, including the Strait of Hormuz blockade, have created significant market uncertainty – and our data suggests this is now taking its toll on manufacturers. Having started the year on a growth footing, the first quarter of the year saw the biggest drop in sales revenue we’ve recorded since 2024. With fuel prices already up, and energy prices expected to rise later this year, the coming months could reduce confidence, increase costs, and squeeze margins even more. While many SMEs have slim buffers to weather these changes, our data suggests they’re taking steps to mitigate the impact by reducing stock on hand to protect their margins.”
View the full Unleashed Manufacturing Health Index report.
