Plumbing and heating contractors reported a modest improvement in activity and confidence in the final quarter of 2025, but profitability continued to deteriorate as cost and skills pressures intensified, according to the latest State of Trade report from SNIPEF.
The Q4 2025 State of Trade found that 41% of firms were busier than expected, while 36% reported forward workloads above expectations.
Despite this, nearly half of businesses (47%) said profit margins had fallen, up from 35% in Q3, with 14% experiencing a significant decline.
Rising costs continue to squeeze margins
Input cost inflation remains a major issue across the sector, with 93% of firms reporting increases in prices. SNIPEF said rising costs are placing sustained pressure on the financial resilience of plumbing and heating businesses, limiting their ability to convert stable workloads into improved returns.
Confidence within the profession improved quarter on quarter, with 45% of firms describing themselves as confident or very confident, compared with 33% in Q3.
However, sentiment towards the wider economy remains weak, with only 9% confident or very confident about the UK economy, and 51% expressing pessimism.
Industry response
Fiona Hodgson, chief executive of SNIPEF, said:
“Q4 shows that demand is holding up and firms are continuing to find ways to stay resilient. However, the defining feature of the quarter is the deterioration in profitability. Too many businesses are absorbing higher costs and ongoing supply chain pressures without being able to protect their margins.”
Fiona Hodgson SNIPEF
She added:
“Across 2025, the message from employers has been consistent. The profession is stable, but the conditions around it are not. Cost inflation has remained widespread, skills shortages continue to limit growth, and confidence in the wider economy is weak.
“Q4 is a clear warning that resilience is increasingly being sustained through margin compression.”
Skills shortages persist as apprentice recruitment falls
The report highlights ongoing challenges in the skills market, with 67% of firms reporting low local availability of skilled professionals. Despite this, 64% of respondents said they were very unlikely to recruit an apprentice in the next six months.
SNIPEF said this reflects the financial pressures facing small and medium-sized firms, with the cost of apprentice training increasingly falling on employers.
The federation’s Employer Insights research, published in late 2025, found that upfront and non-productive training costs are becoming prohibitive for many businesses.
Hodgson said:
“Employers want to train the next generation, but the economics no longer stack up. We are seeing acute skills shortages at the same time as businesses are pulling back from apprentice recruitment because the costs sit almost entirely with the employer.
“Without proper support, firms are being asked to absorb thousands of pounds in training costs at a time when margins are already under severe pressure.”
Key findings from Q4 2025
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41% of firms were busier than expected, up from 37% in Q3
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36% reported forward order books above expectations, up from 32%
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47% reported falling profit margins, including 14% falling significantly
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93% experienced input price increases
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67% reported low local availability of skilled professionals
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64% were very unlikely to recruit an apprentice in the next six months
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45% were confident in the profession, compared with 9% confident about the UK economy
Call for policy intervention
The organisation said policymakers should focus on improving the conditions that enable SMEs to invest, recruit and train, including stronger support for skills and apprenticeships, measures to reduce employer cost burdens, and greater certainty to support business planning.
