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China’s industrial profit growth accelerates

PROFIT growth in china’s industrial sector accelerated last month due to rising prices and a low base last year.

The industrial profits in November rose 14.5 percent year-on-year, up from 9.8 percent growth in October, the National Bureau of Statistics said today.

The data covers large enterprises with annual revenues of more than 20 million yuan from their main operations.

For the first 11 months this year, combined profits rose 9.4 percent from the same period last year, 0.8 percentage points faster than the combined profits in the first 10 months this year.

“The improvement was mainly due to rising prices, as PPI inflation jumped strongly to 3.3 percent in November, and to a low base given consistent negative profit growth throughout the whole 2015,” Nomura Securities analysts wrote in a note.

The analysts said the factors will continue to play a role this month to lift industrial profit growth, but details in November’s data revealed unbalanced development between state-owned sector and the private one.

Official data showed that profit growth at state-owned enterprises rose by 3.4 percentage points to 8.2 percent in the first 11 months this year, but that of private enterprises fell by another 0.7 percentage points to 5.9 percent.

“We are conservative about the longer-term profit outlook, as we do not see signs of a recovery in aggregate demand given a cooling property market and high corporate leverage,” the Nomura note said.

He Ping, an NBS official, in a statement said inventory and costs have dropped in November as a good sign for future growth.

But uncertainties still remain in improving the efficiency in the industrial sector as profit growth relies too heavily on prices increases in the oil processing and steel industries.


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