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China's industrial profits fall 4.6% as economy slows down
30
Nov '15
China's industrial profits sharply declined by 4.6 per cent year-on-year in October, widening the 0.1 per cent drop in September, leading to a further delay in the economic rebound than expected and adding to the corporate debt default risk, according to reports in the Chinese media.

The sluggish data reported by the National Bureau of Statistics was mainly driven down by the energy-and commodity-intensive industries with problems of overcapacity, including oil, steel and coal.

But the high-tech manufacturing industry achieved 14.2 per cent year-on-year profit growth. Profits in the equipment manufacturing industry increased by 8.6 percent, the NBS said.

In the first 10 months, the country's industrial profits shrank 2 per cent from a year earlier, reaching a total of 4.87 trillion yuan ($785 billion).

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.”

A series of economic indicators in October suggested that the world's second-largest economy has not yet seen any rebound after GDP hit a six-year low of 6.9 per cent in the third quarter, although the government has made efforts to support growth through both monetary and fiscal measures.

Manufacturing sales fell 1.4 per cent year on year in October, widening from the 0.5 per cent 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 per cent last month, down from 5.7 per cent in September.

Fixed-asset investment added 10.2 per cent to 44.7 trillion yuan in the first 10 months, easing from the 10.3 per cent 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 per cent from a year earlier in October, to notch a 44th straight month of decline. (SH)

Fibre2Fashion News Desk – India

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