China’s industrial earnings growth collapses as commodity prices fall

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Workers wearing face masks after the coronavirus disease (COVID-19) outbreak load steel products for export onto a cargo ship at a port in Lianyungang, Jiangsu Province, China, May 27, 2020. China Daily via REUTERS

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  • China Nov Industrial Earnings + 9% YoY, down from + 24.6% in October
  • China Jan-Nov industrial earnings + 38% YoY, down from + 42.2% in January-Oct

BEIJING, Dec. 27 (Reuters) – Profits in China’s industrial companies grew much more slowly in November, the statistics bureau said on Monday, under pressure from falling prices of some commodities, a sluggish real estate market and weaker consumer demand.

Net income rose 9.0% year over year to 805.96 billion yuan ($ 126.54 billion) in November, well below the 24.6% increase reported in October.

From January to November, industrial company profits rose 38.0% year-over-year to 7.98 trillion yuan, slower than the 42.2% increase in the first 10 months of 2021, the statistics bureau said.

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Zhu Hong, chief statistician at NBS, said while government efforts to cool off rising wholesale prices in November took cost pressures off downstream industries, the containments meant the mining and raw materials sectors’ contribution to overall profit growth was weakened.

“But businesses are still under huge cost pressures and the improvement in profits for the downstream sector needs to be further consolidated,” Zhu said in a statement accompanying the data release.

China’s scorching factory inflation cooled slightly in November, fueled by government crackdown on soaring commodity prices and a weakening power crisis as Beijing sought to mitigate the crippling economic effects of rising costs. Continue reading

The world’s second-largest economy, which lost momentum after a solid recovery from the pandemic last year, faces several challenges as the housing downturn deepens, supply bottlenecks persist, and tough COVID-19 restrictions weigh on consumer spending.

The country’s housing shortage has also hurt the steel sector, while cement, glass and home appliance production remains vulnerable to falling demand. Continue reading

At an important agenda-setting meeting earlier this month, China’s leaders pledged to stabilize the economy and keep growth at reasonable levels in 2022. read more

The People’s Bank of China (PBOC) slashed banks’ cash reserves this month and cut the one-year policy rate to fuel growth. Continue reading

The industrial profit data covers large companies with annual sales of over 20 million yuan from their primary business.

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Reporting by Albee Zhang, Stella Qiu, and Gabriel Crossley; Adaptation by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.


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