Region’s construction sector desperately seeking certainty, says accountancy firm MHA

The region’s construction sector can only start investing for growth when market stability returns, according to an expert at accountancy and advisory firm MHA.

Joe Sullivan, a partner at Lancashire-based MHA, was speaking after the latest construction sector data, from S&P Global’s Purchasing Managers’ Index (PMI) revealed a further contraction in confidence in November.

The index, where a score below 50 indicates the sector is contraction, hit 39.4 in November, down from 44.1 in October and marking the steepest fall in confidence since the pandemic in 2020.

Joe, who is part of the firm’s Real Estate and Construction team and works with construction businesses across the region, said: “Last month marked the eleventh consecutive month with the PMI below 50, and the steepest contraction since May 2020, so at 39.4 it’s no surprise we are still in contraction territory. The sector continues to operate under significant pressure.

“The long-anticipated Budget offered construction firms some grounds for cautious optimism, particularly in areas like workforce development, investment incentives and infrastructure support. But the underlying reality remains the same: rising labour costs, ongoing planning delays, global headwinds and the potential dampening effect of a mansion tax are still weighing heavily on sentiment.

“Core construction activity continues to be slow, and with weak demand and a thin pipeline of new projects, any improvement is likely to be slow and steady.”

Beyond immediate construction activity, the sector faces growing structural pressures that continue to constrain growth, according to Joe.

The Renters Reform Bill and extra taxes on private landlords are adding uncertainty to residential investment, while rising compliance and licensing costs squeeze already-tight margins.

Rapid increases in the National Minimum Wage (up around 17–18% over two years versus roughly 12% for median pay) is also narrowing the gap with pay for skilled trades and pushing wage costs higher. Together, these pressures make long-term planning, recruitment, and retention increasingly difficult for firms.

Joe added: “Our clients consistently tell us is that stability, clarity, and predictability in policy are essential. Construction companies, investors and lenders plan on a three, to five-year horizon, yet changes introduced in a single Budget can recalibrate the economics of a project overnight.

“As we move into the final stretch of the financial year, firms are still looking for the certainty that enables long-term investment. The sector has shown its resilience time and again, but it can only convert that resilience into growth when operating in a stable environment.”