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Industrial Profit growth accelerates in Q1
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Profits among China’s manufacturing companies grew faster in the first quarter, providing new evidence of an economic stabilization in China, data from the National Bureau of Statistics showed today.
Net earnings grew 7.4 percent from a year earlier to 1.34 trillion yuan (US$206 billion) in the first quarter. The pace accelerated from the increase of 4.8 percent in the first two months. In March alone, manufacturers reported a profit of 561.2 billion yuan, up 11.1 percent on an annual basis.
He Ping, a researcher at the bureau, said the recovery was driven by accelerated sales growth, a milder decline in factory product prices, lower costs and increased profits from investments and non-operating revenue.
“Revenues of industrial companies expanded 4.6 percent in March, the fastest monthly pace in three years, while narrowing drop in producer prices also contributed significantly to profit growth,” He said.
Despite the rebound, part of the profit growth was a result of a low comparative base and increased investment income that may not be sustainable, He noted.
In March, investment income rose 20.4 percent from a year earlier, reversing a 3 percent decline in the first two months, while non-operating income surged 68.3 percent year on year. Profits from investments and non-operating revenue accounted for 30.5 percent of industrial profit growth last month.
Among the 41 industries being tracked, 31 presented profit growth in the January-March period, led by IT equipment companies and chemical companies, while 10 industries reported contraction, among which coal miners said their profits slumped 92.6 percent.
Profits of state-owned manufacturers slumped 5.7 percent year on year to 235.8 billion yuan in the first three months. Private companies saw their profit grow 7.7 percent to 485 billion yuan and companies from Hong Kong, Macau and Taiwan posted a net profit of 344.2 billion yuan, up 8.9 percent from a year earlier.
The pickup in March industrial profit data added to better-than-expected consumer, investment and factory data pointing to a recovery in the world’s second largest economy.
“The industrial sector is still facing headwinds of insufficient demand, inventory pressure and financial difficulties. It remains to be seen if the profit growth can be sustained,” He noted.
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