Atul Kariya serves as the head of construction and real estate to MHA. He comments on today's S&P construction PMI data in light of the global headwinds and multiple cost pressures facing the construction and real estate sector.
Atul Kariya, Head of Construction & Real Estate at MHA comments on today’s PMI:
Following the dramatic decline in construction activity last month, another fall in the PMI data to 44.6 is hardly surprising given that the economic fundamentals have not significantly changed. This is the sharpest fall since December 2019 and the second month in a row that activity has dipped below 50.0
The construction sector continues to face global headwinds and multiple cost pressures. The industry has battled through in a post-Brexit, post pandemic environment; however, the high corporation tax rate in comparison to other markets and the increase in employment taxes are not a great recipe for creating long term economic growth or stimulating investment into construction.
Starmer’s announcement on housebuilding is positive news, but as today’s data shows, residential building has fallen for the fifth month in a row. While the infrastructure sector remained relatively resilient compared to residential and civil engineering, activity levels still remain below 50. More investment is required to sustain any type of recovery.
The Spring statement is an opportune time for the government to look at the UK economic environment and potentially consider some revisions to their fiscal plans. The UK must create the right environment to provide confidence to investors and construction companies.”
The construction and real estate sectors are vital to the UK’s prosperity, driving economic growth, employment, and investment, while shaping the country’s social infrastructure. Together, these sectors contribute approximately 19-21% of the UK’s GDP, with construction accounting for 6-7% and real estate adding 13-14%. They also provide employment for around 8-9% of the UK workforce, underpinning nearly every other sector of the economy.
Real Estate & Construction is a core sector of both MHA in the UK and globally for Baker Tilly International, where our specialists invest considerable time and resources to ensure our expertise and services are unparalleled.
