"Cautious optimism" for region's construction sector in 2026, says MHA expert

One of the region’s leading advisers to construction businesses believes the sector is preparing for recovery and could return to growth in 2026.

Joe Sullivan, a partner at Lancashire-based accountancy and advisory firm MHA, was speaking after industry data for December showed a slowing of the downturn in the sector, despite it still being deep in contraction territory.

The S&P Global Manufacturing PMI (Purchasing Managers’ Index), seen as key barometer of the sector’s health, edged slightly upwards to 40.1 in December, up from 39.4 in November but still well below the neutral 50.0 value for the twelfth successive month.

Joe, who advises construction and property businesses across the region, said: “While the December construction PMI has edged from November’s five-and-a-half-year low, it remains firmly in contraction territory and still well below the all-important 50 mark.

“This is hardly surprising, as all the difficulties faced for much of 2025 are very much still present. The sector has struggled to gain momentum, with the PMI staying below 50 for the past twelve months, a marked contrast to September 2024 when it peaked at 57.2.

“These figures will scarcely come as a surprise to many in the sector, as economic challenges have persisted throughout much of the year. This is heightened in December with very little money coming in for contractors, as there is minimal activity for nearly three weeks and poor weather can hinder the early stages of construction.”

Joe added: “For the housing market, the last quarter of the year tends to be a busy season as buyers look to be in new homes before Christmas. However, this year, the speculation and uncertainty surrounding a very late Budget meant that buyers were cautious about home purchases and completions underwhelmed.

“Although with interest rates falling and the Budget now settled, there is hope that the first quarter of the year will see increased activity. Yet, for those businesses surviving on razor-thin margins, the end of January traditionally spells real problems with reduced cash remittances from December activities combine with tax and other lumpy outgoings, meaning we could expect further administrations and restructurings.”

Looking to the year ahead, Joe said: “There are, however, glimmers of hope on the infrastructure side as the government’s decade-long Infrastructure Strategy should help to kickstart activity, provide much-needed investment, and create jobs.

“In addition, the acceleration of the return to the office trend post pandemic should help to support the commercial property sector, particularly in major hubs across the country. While significant challenges remain, there is some cautious optimism that the construction sector will return to growth during this year.”