BAKU, Azerbaijan, June 17. China's construction
industry narrowed its contraction pace significantly in May 2026,
yet faced persistent operational pressure from rising input prices
for raw materials and resources.
Data obtained by Trend from the National Bureau of Statistics (NBS) of
China indicates that the business activity index for the
construction sector rose by 0.8 percentage points from April to
48.8%. Although the indicator remains below the critical 50%
threshold that separates expansion from contraction, the trajectory
points to a gradual stabilization across capital and infrastructure
projects.
This stabilization was supported by a substantial influx of new
contracts, as the construction new order index jumped 1.9
percentage points month-on-month to 43.5%. This relative revival on
project sites led to an improvement in labor dynamics, with the
sector's employment index rising by 1.8 percentage points to 41.4%.
Furthermore, builders became more confident about market
development, driving the construction business activity expectation
index up by 1 percentage point to 51.5%.
However, cost inflation remains the principal challenge for
Chinese non-manufacturing enterprises. The composite input price
index for overall business operations rose to 52.2%. Crucially,
while the input price index for the construction industry decreased
by 1.2 percentage points, it remained at an elevated 53.7%,
confirming that raw material procurement costs continue to
climb.
At the same time, fierce market competition prevents developers
from transferring these expenses to end consumers. The overall
sales price index stood at 48.8%, and fell further to 48.6%
specifically within the construction sector, reinforcing that
profit margins for infrastructure and housing projects in China
remain under tight squeeze.
