Profit at mainland industrial firms dropped 1.7 per cent year-on-year last month but the decline was less than the previous two months amid Beijing's efforts to shore up the economy with looser monetary policy. Major industrial firms, companies of more than 20 million yuan (HK$24.29 million) in annual sales, saw their earnings top 468.2 billion yuan last month, down 1.7 per cent year-on-year, compared with a 5.3 per cent dip in May and a 2.2 per cent drop in April, the National Bureau of Statistics said yesterday. The industrial companies amassed 2.31 trillion yuan in net profit for the first half, down 2.2 per cent from the same period last year. The recovery in industrial profit growth is consistent with the changes in industrial production, which rebounded visibly in the latter part of the second quarter amid a significant loosening in both monetary and fiscal policies on the mainland, a report by Beijing Gao Hua Securities said yesterday. The firm expects the recovery to continue in the rest of the second half in light of the policy loosening. Private enterprises generally did better than state-owned enterprises in the rebound. State-owned firms or companies controlled by state-owned firms saw their profit slip 11 per cent year-on-year in the first half, while profit at private companies grew 16.5 per cent year-on-year. Enterprises controlled by Hong Kong or Taiwan investors, which are more vulnerable to waning demand from Europe and the United States, reported a 13.4 per cent drop in profit. The HSBC China purchasing managers index (PMI), also identified a solid rebound in manufacturing output in July. The HSBC PMI jumped to a five-month high of 49.5 in July from 48.2 in June, the strongest growth in nine months, although the figure was still under the 50 benchmark which separates expansion from contraction. It is generally believed that Beijing's looser monetary policy and investment stimulus has started to pay off and industrial companies will benefit from the economic growth. The People's Bank of China has cut interest rates twice since early last month, following three reductions in the reserve requirement ratio of banks since November.