By Qiaoyi Li, Joe Cash and Liangping Gao
BEIJING (Reuters) – China’s industrial profits in October pared an earlier decline, helped by a lower base a year earlier, official data showed on Wednesday, but earnings headlines remained firm as the economy grappled with sluggish demand and inflationary pressures.
China’s booming industrial sector, which includes mining, processing and manufacturing companies, has struggled to remain profitable in the face of sluggish domestic demand hit by a years-long supply crisis, unemployment and trade tensions.
Although policymakers have vowed to meet the government’s target of growing gross domestic product by around 5% this year, the $19 billion economy is lagging behind.
Industrial profits in October fell 10% from a year earlier, better than a 27.1% drop in September, although earnings fell 4.3% in the first 10 months compared to a 3.5% drop in January-September, National Bureau of Statistics data showed. of Statistics (NBS) is shown. .
Profits in most industries improved compared to last month, as new drivers such as machinery and high-tech manufacturing played a supporting role, NBS statistician Yu Weining said in an accompanying statement.
But some private sector economists said October’s improvement was partly the result of a lower base from last year. Industrial profits in October 2023 grew by 2.7%, down from double-digit gains in August and September last year.
“In October’s monthly data alone, the year-on-year rate has a lot of noise due to base effects, and the difference can be largely attributed to this,” said Lynn Song, chief economist for Greater China at ING.
“Overall, profits are still under some pressure this year as the 4.3% year-on-year decline shows, although there is hope that as policy easing begins, the working environment will improve next year.”
DEFLATIONARY PRESSURES
Separate economic indicators earlier this month showed soft demand, with consumer prices the weakest in four months while industrial output continued to decline and new home prices fell at their fastest pace in nine years.
Data earlier this month showed producer prices fell 2.9% year-on-year in October, deeper than the 2.8% drop last month and worse than the 2.5% drop expected. It marked the biggest drop in 11 months.
Inflation in the gateway industry is deep in the petroleum and natural gas industry, oil and coal processing, chemical products manufacturing and automobile manufacturing sectors.
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