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.
