Chinese industrial firms suffered their biggest fall in profits in eight months in October in the latest evidence that the world’s second-biggest economy is slowing.
Industrial profits tumbled 9.9 per cent in October compared to a year earlier, following a 5.3 per cent fall in September, the country’s National Bureau of Statistics said this morning.
China’s economic growth slowed to six per cent in third quarter, its slowest in almost 30 years as domestic and international demand suffered under the long-running US-China trade war.
Today’s industrial profits figures indicate that the weakness in external demand has carried on into the final quarter, suggesting China will slow further towards the end of the year. Yearly growth is still expected to be around 6.5 per cent, however.
“Profits appear to have shifted decisively down again, after seeming to stabilise in recent months,” said Freya Beamish, chief Asia economist at Consultancy Pantheon Macroeconomics.
“The deterioration was present across the board, with mining, commodity-related manufacturing, and non-commodity manufacturing all weakening.”
Profit margins came under pressure in the January to October period, contracting 4.9 per cent, the official data showed. This compared with a 3.9 per cent fall in the first nine months of the year.
Beamish said there were some green shoots but cautioned that they “look exposed in the context of still tight monetary conditions”.
“At the same time, state-owned enterprise profits dropped even more sharply m/m, after a minor uptick in September.”