Data from the National Bureau of Statistics (NBS) showed that profits from China’s major industrial companies surged 11.5% year-on-year in June to CNY666.6 billion ($(95.2 billion). The growth in June was the strongest monthly profit increase since March last year and marked a second consecutive month of monthly profit gain. In May, China’s industrial profit expanded by about 6%.
The increase is attributed to the economic reopening after the coronavirus-related lockdown, which pushed output higher, while production costs turned lower. According to NBS senior statistician Zhu Hong, China’s industrial value-added of major enterprises increased 4.8% year-on-year in June, the strongest in six months, reflecting an uptrend in production and sales.
Zhu added that those firms also saw the first drop in costs this year, signalling a reduced cost pressure on company operations. China’s producer price index decreased 3% last month. Profits from the steel and non-ferrous metal sectors increased by 35.3% and 24.1%, respectively, and became the primary driver in China’s industrial profits in June. In May, both sectors registered profit drops of 50.5% and 49.3%, respectively.
For the first half of the year, China’s industrial profits dropped 12.8% from the same period in 2019. Looking forward, China’s industrial profits still face headwinds from weak demand and the looming impact of the COVID-19 pandemic. According to NBS data, 31 industrial sectors went through profits decline, including mining, manufacturing, and utilities, which saw profits fall of 41.7%, 9.8%, and 8.7%, respectively.
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Published on July 28, 2020 10:24 AM (GMT+8)Last Updated on July 28, 2020 10:24 AM (GMT+8)
