Finance

China’s industrial profit growth slows for sixth month in Aug

An worker inspects a circuit board on the controller manufacturing line at a Gree manufacturing unit, following the coronavirus illness (COVID-19) outbreak in Wuhan, Hubei province, China August 16, 2021. China Each day through REUTERS

  • China Aug industrial income +10.1% y/y vs +16.4% in July
  • China Jan-Aug industrial income +49.5% vs +57.3% in Jan-July

BEIJING, Sept 28 (Reuters) – Income at China’s industrial corporations grew at a weaker tempo in August from a yr earlier, slowing for a sixth consecutive month, as producers struggled with excessive commodity costs, COVID-19 outbreaks and shortages of some key parts.

Income rose 10.1% on yr to 680.3 billion yuan ($105 billion) final month in contrast with a 16.4% achieve in July, information from China’s statistics bureau confirmed on Tuesday.

Momentum on the earth’s second-biggest financial system has weakened in current months, with its huge manufacturing sector buffeted by gathering headwinds.

Industrial manufacturing rose in August at its slackest tempo since July 2020, weighed by home COVID-19 outbreaks, excessive uncooked materials costs, a marketing campaign by Beijing to chop carbon emissions and a persistent scarcity of elements similar to semiconductors.

A sustained crackdown this yr on actual property hypothesis and new borrowing by builders for tasks has additionally sapped demand for construction-related items and providers.

“A sustained and secure restoration in company income is dealing with extra challenges,” stated Zhu Hong, senior statistician on the statistics bureau, in an announcement.

“The epidemic continues to be spreading in some areas, general costs of bulk commodities are excessive, the price of worldwide logistics is elevated, and the scarcity of chips is pushing up company prices.”

Excessive commodity costs in current months have harm the bottom-lines of many medium-sized and downstream factories. China final week vowed to step up coverage coordination to counter challenges from excessive commodity costs.

To chill costs, China will public sale extra industrial metals from its state stockpiles subsequent month in a uncommon launch of inventories. Previous to this yr, Beijing had not bought off state steel reserves for greater than a decade.

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Earlier this month, China additionally launched crude oil from its strategic reserves for the primary time.

However additional dimming the outlook for producers, China has tightened controls on energy utilization by energy-intensive corporations to satisfy local weather targets, hurting manufacturing. The ability shortages have additionally triggered electrical energy cuts throughout areas this month, clouding the financial outlook

“We count on industrial revenue progress to fall additional in coming months amid a notable progress slowdown in H2 as a result of recurring COVID-19 waves and Beijing’s zero-COVID technique, probably slowing exports, and Beijing’s enforcement of property sector tightening and inexperienced measures,” Nomura analysts wrote in a notice.

“We consider the slowdown might be even sharper in September because of extreme energy outages in lots of areas.”

For the January-August interval, industrial corporations’ income rose 49.5% year-on-year to five.61 trillion yuan, slowing from a 57.3% improve within the first seven months of 2021.

Liabilities at industrial corporations rose 8.4% on an annual foundation at end-August, up from 8.2% progress as of end-July.

The commercial revenue information covers giant corporations with annual revenues of over 20 million yuan from their fundamental operations.

($1 = 6.4662 Chinese language yuan)

Reporting by Ryan Woo and Liangping Gao; Modifying by Ana Nicolaci da Costa

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