Â
>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<
Â
Â
Profits at China’s industrial companies returned to growth in June after falling for two consecutive months, mainly driven by recovery in the automobile industry. Profit structure improved as divergence between upstream and downstream industries narrowed.
Profits grew by 0.8% in June from a year earlier, improving significantly from a 6.5% drop in May, showed data released by the National Bureau of Statistics (NBS) on Wednesday.
For the first half of the year, industrial profits grew by 1% year over year, in line with the growth in the first five months, remaining the slowest pace since November 2020, showed the data.
Overall speaking, industrial companies’ profits recovered at a faster pace in June, with profit structure showing some positive changes, said Zhu Hong, senior statistician at the NBS.
As the pandemic was effectively controlled and the industrial chain further recovered, industrial firms’ efficiency improved markedly, said Zhu.
The recovery in profit growth was driven by a pick-up in demand, said Zhou Maohua, an analyst at China Everbright Bank, adding it led to strong profit growth in the upstream sector.
Profitability in the middle and downstream manufacturing sectors, as well as producers of electricity, heat, gas and water, also improved, he said.
By regions, as production resumed in East and Northeast China, industrial profits in the regions declined by 13.5% and 2.7%, respectively, in June from a year earlier, narrowing by 6 percentage points and 27.1 percentage points, showed the data.
In particular, profits of industrial firms in the COVID-hit Yangtze River Delta region which covers Shanghai and its surrounding areas, rose 4.6% in June following a 17.8% slump in May.
Profits of auto producers jumped 47.7% as production resumed in the major auto manufacturing hubs of Shanghai and northeastern Jilin province, with the sector being the biggest driver of the profit rebound among industrial firms, Zhu said.
For the manufacturing sector as a whole, profits fell 9% in June from a year ago, narrowing by 9.5 percentage points from the previous month. Profits at manufacturers of consumer goods fell by 11.7% on year in June, narrowing by 6.7 percentage points, as consumer market continued to recover.
Profits of the upstream mining sector remained rapid growth, rising by 77.9% in June from a year earlier, though slowing by 14.3 percentage points from a month earlier. For the first six months of the year, profits of the mining sector surged by 120% on year, slowing by 11 percentage points from the period of January – May.
Notably, manufacturing sector’s profit accounted for 76.2% of the total industrial profits in June, rising by 2.6 percentage points from May, indicating improving profit structure and easing divergence between upstream and downstream profits, said Zhu.
The profit rebound was encouraging, but Zhu said profit growth remained weak and the external environment was becoming more complicated and grim. “While costs keep rising, some firms are facing hardship in production and operation as well as potential losses.”
Divergence between state-owned companies and private companies continued to wide in June. Profits at state-owned industrial companies grew by 10.2% on year in the first half, accelerating by 0.4 percentage points from the first five months, while profits at private industrial companies declined by 3.3% year over year, 1.1 percentage points faster than that in January – May and marking the slowest since September 2020.
Liabilities at industrial firms jumped 10.5% at end-June, also remaining the same as that as of end-May.
Profits at China’s industrial companies returned to growth in June after falling for two consecutive months, mainly driven by recovery in the automobile industry. Profit structure improved as divergence between upstream and downstream industries narrowed.
Profits grew by 0.8% in June from a year earlier, improving significantly from a 6.5% drop in May, showed data released by the National Bureau of Statistics (NBS) on Wednesday.
For the first half of the year, industrial profits grew by 1% year over year, in line with the growth in the first five months, remaining the slowest pace since November 2020, showed the data.
Overall speaking, industrial companies’ profits recovered at a faster pace in June, with profit structure showing some positive changes, said Zhu Hong, senior statistician at the NBS.
As the pandemic was effectively controlled and the industrial chain further recovered, industrial firms’ efficiency improved markedly, said Zhu.
The recovery in profit growth was driven by a pick-up in demand, said Zhou Maohua, an analyst at China Everbright Bank, adding it led to strong profit growth in the upstream sector.
Profitability in the middle and downstream manufacturing sectors, as well as producers of electricity, heat, gas and water, also improved, he said.
By regions, as production resumed in East and Northeast China, industrial profits in the regions declined by 13.5% and 2.7%, respectively, in June from a year earlier, narrowing by 6 percentage points and 27.1 percentage points, showed the data.
In particular, profits of industrial firms in the COVID-hit Yangtze River Delta region which covers Shanghai and its surrounding areas, rose 4.6% in June following a 17.8% slump in May.
Profits of auto producers jumped 47.7% as production resumed in the major auto manufacturing hubs of Shanghai and northeastern Jilin province, with the sector being the biggest driver of the profit rebound among industrial firms, Zhu said.
For the manufacturing sector as a whole, profits fell 9% in June from a year ago, narrowing by 9.5 percentage points from the previous month. Profits at manufacturers of consumer goods fell by 11.7% on year in June, narrowing by 6.7 percentage points, as consumer market continued to recover.
Profits of the upstream mining sector remained rapid growth, rising by 77.9% in June from a year earlier, though slowing by 14.3 percentage points from a month earlier. For the first six months of the year, profits of the mining sector surged by 120% on year, slowing by 11 percentage points from the period of January – May.
Notably, manufacturing sector’s profit accounted for 76.2% of the total industrial profits in June, rising by 2.6 percentage points from May, indicating improving profit structure and easing divergence between upstream and downstream profits, said Zhu.
The profit rebound was encouraging, but Zhu said profit growth remained weak and the external environment was becoming more complicated and grim. “While costs keep rising, some firms are facing hardship in production and operation as well as potential losses.”
Divergence between state-owned companies and private companies continued to wide in June. Profits at state-owned industrial companies grew by 10.2% on year in the first half, accelerating by 0.4 percentage points from the first five months, while profits at private industrial companies declined by 3.3% year over year, 1.1 percentage points faster than that in January – May and marking the slowest since September 2020.
Liabilities at industrial firms jumped 10.5% at end-June, also remaining the same as that as of end-May.