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Industrial profit growth slows slightly but remains solid
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PROFIT growth at China’s industrial companies moderated in October but remained solid as the recovery in the world’s second-largest economy stabilized.
Industrial profits expanded 15.1 percent from a year earlier to 581 billion yuan (US$94.5 billion) last month, down from the rate of 18.4 percent in September, the National Bureau of Statistics said today.
Yu Jianxun, a researcher at the bureau, said companies’ sales increased steadily, which guaranteed their profitability, and the slower growth pace was largely due to a higher comparative base.
In 2012, industrial profits jumped 21.6 percent in October, compared with the rise of 7.8 percent in its September.
Zhu Haibin, chief economist for China at JPMorgan, said overall industrial profit maintained solid growth last month.
“Although the pace moderated, higher base effect contributed partly to the difference,” Zhu said.
“Looking ahead, further recovery in industrial activity and external demand, as well as gradual pricing recovery, will likely support industrial profits,” Zhu said.
In the first 10 months, profits at China’s industrial companies rose 13.7 percent, up 0.2 percentage points from the rate in the first three quarters, the official data showed.
Among the 41 industries tracked by the bureau, 35 reported that their profit increased during the January-October period, led by stronger performance in power generation, automobiles, petroleum, ferrous metal smelting and non-metallic mineral products. Profits in these five industries accounted for 58.1 percent of the increase in total industrial profits.
Meanwhile, net earnings at state-owned industrial enterprises gained 9.1 percent year on year in the first 10 months. Foreign-invested manufacturers saw their profits jump 16.4 percent, while those of private companies climbed 17.5 percent.
China’s gross domestic product growth accelerated to 7.8 percent in the third quarter, up from the increase of 7.5 percent in the second quarter, indicating a stabilizing economic recovery.
China’s economy may grow 7.6 percent on an annual basis this year and 7.4 percent in 2014, JPMorgan’s Zhu said.
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