Profits at mainland industrial firms jumped 7.8 per cent in the first 11 months of this year, cementing the nation's nascent economic recovery. Earnings at industrial firms with annual revenue of more than five million yuan (HK$5.66 million) grew to 2.58 trillion yuan during the period, compared with a 3.4 per cent decline in the first 10 months of this year, the National Bureau of Statistics said yesterday. The turnaround helped send the Shanghai Composite Index up 47.43 points, or 1.5 per cent, to 3,188.79 yesterday, the highest since December 16. Economists broadly agreed industrial profits were on track to a solid recovery next year, helped by the country's continuous efforts to increase economic growth and domestic consumption and combat overcapacity at factories. 'The rebound is consistent with the overall recovery in the [gross domestic product] and production output since September,' UBS economist Wang Tao said. 'It helps dispel some concerns that the economic recovery won't help profits of companies.' The economy grew 8.9 per cent in the third quarter from a year earlier, up from 7.9 per cent in the second quarter and 6.1 per cent in the first, which was the slowest pace in more than a decade. Wang forecasts profits at industrial companies will rise about 10 per cent this year and accelerate to about 20 per cent next year. Industrial profits for the first 11 months of last year grew 4.9 per cent. Offering certainty on the central government's continuing economic stimulus policies, Premier Wen Jiabao pledged on Sunday not to withdraw the measures 'too early'. He said it was premature to say whether the country had weathered the impact of the global financial crisis. However, he saw the need to keep in place proactive fiscal policy and moderately loose monetary policy next year. A Goldman Sachs research report estimated that the economic stimulus measures and credit growth would fuel industrial production growth further in the first half of next year. Half of the four trillion yuan economic stimulus package is earmarked for next year, and government-led spending largely on infrastructure will benefit sectors such as metals, steel, iron and electricity. In the first 11 months of this year, power companies led the turnaround in profitability with a 268.6 per cent increase on the back of tariff rises and lower coal prices. Transport equipment manufacturers followed with a 43 per cent growth. Shareholding firms posted a 4.2 per cent rise in profits in the 11-month period, but those at state-owned firms shrank 4.5 per cent. Wang raised doubts over mainland efforts to enhance the industrial sector. 'It depends on how successfully it combats the overcapacity problem,' he said. 'How can the government force steel mills to shut down if they are profitable?'