China’s industrial firms’ profits increased in May, first time since coronavirus outbreak
- China’s industrial firms’ profits in May increased 6 per cent year on year after a four-month slump
- Further observation is needed to see if profit recovery could continue, according to the National Bureau of Statistics
Profits at China’s big industrial firms increased in May for the first time since the coronavirus outbreak as China’s economy shows signs of recovery.
Total profits in May reached 582.34 billion yuan (US$82 billion).
The NBS attributed the improvement in May to a significant drop in the purchase price of industrial products, as well as profit rebounds in several sectors, including petroleum processing, electric power, chemicals and steel.
“Although the profits of industrial firms in May have been positive with a growth for the first time since this year, the market demand under the influence of the pandemic is still weak, and it needs further observation to see if profit recovery could continue,” senior NBS statistician Zhu Hong said.
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Over the first five months of 2020, industrial firms saw profits fall by 19.3 per cent year on year, a slight improvement from the 27.4 per cent drop over the first four months, and the record 38.3 per cent year-on-year decline in the first two months of 2020.
This only covers the profits received from the principal business of industrial enterprises above a designated size.
Earlier this month, China reported strong growth in its industrial engine for the month of May, as the economy continued to slowly recover from the effects of the coronavirus pandemic.
In May, China’s industrial production, a gauge of manufacturing, mining and utilities sector activity, grew by 4.4 per cent from a year earlier, up from 3.9 per cent growth in April, but slightly below the median forecast of a Bloomberg poll of analysts, which called 5.0 per cent growth. Within that, manufacturing grew by 5.2 per cent, with mining up 1.1 per cent.
Retail sales, a key indicator of consumption in the world’s biggest consumer market, remained negative at minus 2.8 per cent growth from a year previous, but was an improvement on April’s 7.5 per cent drop, the National Bureau of Statistics data showed. Analysts had expected a 2.3 per cent contraction.
Fixed asset investment, the year-to-date value of spending on real estate, infrastructure and capital equipment, fell by 6.3 per cent from a year earlier in the first five months of 2020, worse than the median result of the Bloomberg poll of analysts, which predicted minus 6.0 per cent. It was also better than April’s reading of minus 10.3 per cent.
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Profits of state-owned industrial enterprises decreased 39.3 per cent year on year in the January-May period to 440.2 billion yuan (US$62.1 billion), as compared with the 11 per cent profit drop in private-sector industrial companies.
Among all 41 industrial sectors surveyed by the NBS, profits in 30 sectors fell in the first five months of the year, while profits rose in 10 sectors and were flat in one.
The largest profit drops were in oil, fuel and other fuel processing, chemical raw materials and chemical products manufacturing and car manufacturing. But, profits in the computer, communications and other electronic equipment manufacturing sector increased by 34.7 per cent year on year in the first five months of the year.
Profits in the car manufacturing sector slumped 33.5 per cent year on year in the first five months, while China’s car sales saw growth of 4.4 per cent year on year in April, after a 10th consecutive monthly decline.
