China’s industrial profits experienced a decline for the second month in a row in November, heightening worries that sluggish domestic demand and ongoing deflation are impacting corporate earnings and the overall economic recovery.
Industrial profits dropped by 13.1% year-on-year in November, a sharper fall than the 5.5% decrease recorded in October, according to data released by the National Bureau of Statistics on Saturday. This decline was steeper than anticipated, with Bloomberg Economics predicting a 15% drop.
During the first 11 months of the year, industrial profits grew by only 0.1%, down from a 1.9% increase noted in the January–October timeframe, indicating a loss of momentum as the year progresses. Economists pointed to weak household spending, declining investment, and persistent factory-gate deflation as significant obstacles, despite some strength in exports, as reported by Reuters.
Manufacturing profits climbed 5% in the first 11 months, bolstered by advanced sectors like aerospace and electronics, while utilities remained in positive growth territory. In contrast, mining companies continued to face double-digit declines, particularly in coal-related industries.
The pronounced drop in November could further impact investment and employment, analysts cautioned. Nevertheless, policymakers have yet to implement new stimulus measures, as Beijing seems confident in achieving its annual growth target of approximately 5%.
Looking forward, economists anticipate only modest monetary easing and limited fiscal expansion next year, even as demands increase for more robust initiatives to boost domestic demand.
(With Agency Inputs)
