BEIJING (Reuters) – China’s industrial companies’ profits rose for the second consecutive month and at the fastest pace in more than a year, adding to signs that the country’s economic recovery from the coronavirus crisis is winning impulse.
FILE PHOTO: A worker welds a steel bicycle tire at a factory that makes sports equipment in Hangzhou, Zhejiang Province, China, September 2, 2019. China Daily via REUTERS / File Photo
The statistics bureau said Monday that China’s industrial companies’ profits rose 11.5% yoy in June to 666.55 billion yuan ($ 95.27 billion), marking further earnings growth. fast since March 2019.
May marked the sector’s first monthly growth in earnings since November, prior to the start of the coronavirus pandemic.
For January-June, earnings of industrial companies fell 12.8% yoy to 2.51 trillion yuan, but declined from a 19.3% drop in the first five months.
After a record downturn earlier in the year, China’s economy recovered more than expected in the second quarter as virus-blocking measures ended and policymakers increased stimulus. But analysts warn that the rebound largely depends on state-led investment, while domestic and global demand remains weak.
Mining of steel, oil and gas, refining of oil and non-ferrous metals saw significant gains in profits in June with declining manufacturing costs and improved demand, said Zhu Hong, an official with the statistics bureau. , in a statement published along with the data.
But Zhu warned of the outlook as market demand remains weak amid the effects of the COVID-19 pandemic and the international trade situation is “complex and severe”, so uncertainties remain regarding the sustainability of the earnings growth.
Leading manufacturers of raw pharmaceutical ingredients and medical equipment, including Zhejiang Nhu (002001.SZ) and Zhejiang Yueyue (002223.SZ), said they expect higher profits during the first six months on better sales.
Indicators ranging from factory surveys to producer prices have reflected signs of a further rebound in manufacturing, but analysts say factories may have a hard time maintaining momentum as pent-up demand declines, the fight for exports and heavy floods disrupt construction and other economic activities in the country. Yangtze Delta.
Increased inventories and sluggish demand could also weigh on profit margins.
Profits for China’s state-owned industrial companies fell 28.5% yoy in the first six months, after falling 39.3% in January-May, data from the statistics bureau showed.
Liabilities at industrial companies increased 6.4% annually at the end of June, compared to a 6.6% growth at the end of May.
Private sector earnings fell 8.4% in January-June, slowing from the 11.0% drop in January-May.
Industrial earnings data covers large companies with annual revenues of more than 20 million yuan from their core operations.
Reports by Gabriel Crossley and Roxanne Liu; Editing by Kim Coghill and Shri Navaratnam
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