The latest quarterly State of Trade report from SNIPEF, the Plumbing and Heating Federation, found that 41% of firms reporting being busier than expected in Q4 2025, with 36% reporting workloads above expectations.

However, this improvement in activity has not translated into stronger financial performance, with nearly half of firms (47%) reporting falling profit margins, up from 35% in Q3, including 14% experiencing a significant decline.

Cost pressures also remain widespread, with 93% of firms reporting rising input prices.

Confidence within the profession improved quarter on quarter, with 45% of firms feeling confident or very confident, up from 33% in Q3.

In contrast, sentiment towards the wider economy remains weak, with only 9% of respondents confident or very confident about the UK economy, while 51% reported being pessimistic or very pessimistic.

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.”

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.”

Headline findings from Q4 2025 State of Trade include:

• 41% of firms were busier than expected, up from 37% in Q3
• 36% reported forward order books above expectations, up from 32% in Q3
• 47% reported profit margins falling, up from 35% in Q3, including 14% falling significantly
• 93% reported input price increases
• 67% reported low availability of skilled professionals locally
• 64% were very unlikely to recruit an apprentice in the next six months
• 45% were confident or very confident in the profession, while only 9% were confident or very confident about the UK economy

The report also highlights a growing contradiction in the plumbing and heating labour market – skills shortages remain widespread, with two-thirds of firms (67%) reporting low local availability of skilled professionals, yet appetite to recruit and train apprentices remains weak, with 64% very unlikely to recruit an apprentice in the next six months.

According to SNIPEF, this disconnect reflects the growing financial burden of apprentice training being borne almost entirely by employers.

The organisation’s Employer Insights research, published in late 2025, highlighted that the upfront and non-productive costs associated with employing an apprentice, in the absence of meaningful government support, are increasingly prohibitive for small and medium sized businesses.

Ms 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.”

SNIPEF is urging policymakers to focus on the conditions that determine whether small and medium sized firms can invest, recruit and train.

Priorities should include stronger support for skills and apprenticeships, measures to reduce the cost burden on employers, and greater certainty to support business planning and household investment, it says.