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November 28, 2015

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China’s industrial profits drop 4.6% amid slowing economy

PROFITS at China’s industrial companies fell 4.6 percent from a year earlier in October, and sparked renewed concerns over China’s slowing economy.

The net earnings of manufacturers totaled 559.5 billion yuan (US$87.5 billion) last month, deteriorating from the 0.1 percent drop in September, the National Bureau of Statistics said yesterday.

He Ping, a researcher at the bureau, blamed slowing sales, diminished benefit from the yuan’s devaluation, and increasing operational costs for the fall in profits.

“China’s industrial profits deteriorated significantly last month,” He said. “Industries including refinery, steel and coal reported much higher losses in October due to the dual impact of weak domestic demand and the country’s efforts to reduce overcapacity.”

Manufacturing sales fell 1.4 percent year on year in October, widening from the 0.5 percent dip a month earlier. Operational costs increased 0.04 yuan from a year earlier to 85.84 yuan per 100 yuan of sales.

The latest economic activity data revealed renewed signs of weakness as the growth of industrial production and fixed-asset investment eased in October and retail sales were almost flat from a month earlier.

Industrial production rose 5.6 percent last month, down from 5.7 percent in September.

Fixed-asset investment added 10.2 percent to 44.7 trillion yuan in the first 10 months, easing from the 10.3 percent gain in the first three quarters.

The official Purchasing Managers’ Index, a gauge of comprehensive operational conditions in the state-owned manufacturing sector, was 49.8 last month, flat from September, pointing at weakening industrial activities for the fourth straight month.

Meanwhile, the Producer Price Index, a factory-gate gauge of inflation, shed 5.9 percent from a year earlier in October, to notch a 44th straight month of decline.

China’s gross domestic product grew 6.9 percent from a year earlier in the third quarter — its slowest pace since the aftermath of the global financial crisis in 2009.

In the January-October period, profits of manufacturing firms totaled 4.86 trillion yuan, down 2 percent year on year while they shrank 1.7 percent in the first three quarters.


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