Challenge on for construction sector to sustain spring optimism, says Lancashire-based advisor

The North West construction sector faces a huge battle to achieve growth as it grapples with the effects of high taxes, growing costs and investor uncertainty.

That’s the view of a leading advisor to the sector after a key business confidence index for the industry showed only marginal growth in April.

Joe Sullivan, partner for construction and real estate at accountancy and business advisory firm MHA, was commenting after the S&P Global UK Construction PMI (purchasing manager’s index) reached 46.6, slightly up from 46.4 in March, but still well short of the magic 50.0 mark that signifies growing confidence and business performance.

Joe, who advises property and construction businesses across the region, said: “While the economic landscape has not fundamentally shifted, the slight uptick in construction PMI in April was to be expected as the warmer weather in spring tends to be good for the sector.

“Despite the minimal rise, there is little reason for celebration as PMI still remains below the 50.0 threshold, suggesting that there is some way to go before the industry sees a significant return to activity.

“All three subsectors continued to decline, although the residential sector saw a less steep contraction than at the beginning of the year.”

Joe added: “As we progress through the year, we may see an increase in PMI activity as interest rates start to fall and an easing of the backlog of Gateway 2 applications, associated with new building safety legislation. However, this rise is likely to be short-lived.

“There will always be companies that thrive in any market, but in general the sector will continue to bumble along the bottom as it grapples with the high tax environment, associated increasing costs and the uncertainty for investors caused by the tariffs.”

MHA, the UK independent member firm of Baker Tilly International and 13th largest accountancy group in the UK, has Lancashire offices in Preston and Lancaster.