Industry Insight Report: Industrial Supply Distributors Q2-2025
Industry Insight Report: Industrial Supply Distributors Q2-2025
Capital Spending Slows as Trade Uncertainty Grows
The industrial supply distribution sector is feeling the effects of an increasingly unpredictable business climate this quarter. April saw a significant 1.3% drop in non-defense capital goods orders excluding aircraft, a closely watched barometer of business investment. This marks the steepest monthly decline since October and reflects growing hesitancy among buyers amid heightened tariff tensions and shifting trade policies.
Economic headwinds intensified in June as steel and aluminum tariffs doubled to 50%, adding pressure to supply chains and squeezing margins for distributors. Many firms are adopting a more agile operating model, with a renewed focus on pipeline analysis, price sensitivity, and customer retention strategies, according to Industrial Distribution.
Key Trends in the Industrial Distribution Market
Softening Demand Signals: The dip in capital goods orders suggests businesses are pulling back on equipment investments. This will likely ripple through to industrial distributors, especially those heavily tied to OEM and MRO sectors.
Labor Market Shift: Employment in the industrial supply distribution sector is down 3.5% year-over-year. Despite a decade of solid growth (15.1%), the pace has slowed in recent years, signaling more cautious hiring.
Wage Pressures Persist: Average hourly wages jumped 7.4% year-over-year to $31.50. Over the past three years, wage growth for nonsupervisory employees has surged nearly 28%, outpacing broader private-sector wage trends. Distributors are being forced to do more with leaner teams and higher labor costs.
Outlook: Slower Growth, Higher Scrutiny
From 2025 through 2029, the industrial supply distribution industry is expected to grow at a modest 2.52% CAGR, slower than the overall U.S. economy. With margin compression, policy risk, and uncertain demand patterns looming, now is a critical time for owners to evaluate the future of their business. For some, this may be the right time to consider an exit strategy, especially as private equity continues to seek stable, cash-flowing B2B distribution assets.
Want to know what your industrial supply business is worth in today’s market? Take our no-obligation Sellability Score Today to see how your business stacks
Lion Business Advisors’ quarterly industry insights incorporate data and trends sourced from internal deal flow and buyer activity, Vertical IQ, and market comparables from platforms such as Axial and BVR (Business Valuation Resources).
Industry Insight Report: Industrial Supply Distributors Q2-2025
Capital Spending Slows as Trade Uncertainty Grows
The industrial supply distribution sector is feeling the effects of an increasingly unpredictable business climate this quarter. April saw a significant 1.3% drop in non-defense capital goods orders excluding aircraft, a closely watched barometer of business investment. This marks the steepest monthly decline since October and reflects growing hesitancy among buyers amid heightened tariff tensions and shifting trade policies.
Economic headwinds intensified in June as steel and aluminum tariffs doubled to 50%, adding pressure to supply chains and squeezing margins for distributors. Many firms are adopting a more agile operating model, with a renewed focus on pipeline analysis, price sensitivity, and customer retention strategies, according to Industrial Distribution.
Key Trends in the Industrial Distribution Market
Softening Demand Signals: The dip in capital goods orders suggests businesses are pulling back on equipment investments. This will likely ripple through to industrial distributors, especially those heavily tied to OEM and MRO sectors.
Labor Market Shift: Employment in the industrial supply distribution sector is down 3.5% year-over-year. Despite a decade of solid growth (15.1%), the pace has slowed in recent years, signaling more cautious hiring.
Wage Pressures Persist: Average hourly wages jumped 7.4% year-over-year to $31.50. Over the past three years, wage growth for nonsupervisory employees has surged nearly 28%, outpacing broader private-sector wage trends. Distributors are being forced to do more with leaner teams and higher labor costs.
Outlook: Slower Growth, Higher Scrutiny
From 2025 through 2029, the industrial supply distribution industry is expected to grow at a modest 2.52% CAGR, slower than the overall U.S. economy. With margin compression, policy risk, and uncertain demand patterns looming, now is a critical time for owners to evaluate the future of their business. For some, this may be the right time to consider an exit strategy, especially as private equity continues to seek stable, cash-flowing B2B distribution assets.
Want to know what your industrial supply business is worth in today’s market?
Take our no-obligation Sellability Score Today to see how your business stacks
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