(Dec 27): China’s industrial profits fell for a second month in November, adding to signs that weakening domestic demand and persistent deflation are weighing on corporate earnings.
Industrial profits dropped 13.1% last month from a year earlier after a 5.5% decline in October, according to data released by the National Bureau of Statistics Saturday. Bloomberg Economics had forecast a slide of 15%.
Profits in the first 11 months of the year rose 0.1%, down from a 1.9% increase recorded in the January-October period.
The weak performance highlights the pressure on companies from soft domestic demand and worsening industrial deflation. More headwinds may lie ahead as investment continues to slump, consumption growth cools and trade tensions rise with other partners despite a tariff truce with the US.
Manufacturers posted a 5% increase in profit over the first 11 months, supported by strength in advanced industries such as aerospace and electronics production. Utilities also stayed in growth territory, while miners continued to suffer double-digit declines.
The larger contraction in industrial profits in November could weigh further on investment and hiring. Still, policymakers have so far held back from rolling out additional stimulus as the government’s annual growth target of around 5% appears within reach.
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Looking ahead, economists expect only modest monetary easing and a limited expansion in fiscal support next year after top leaders struck a cautious tone on stimulus as a key policy at a meeting earlier this month.
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