Profit advances in Chinese industrial companies quickened last month on increases in the power-production and automotive sectors, aiding growth after a survey showed a contraction in manufacturing this month.
Net income rose 9.3 percent from a year earlier to 437 billion yuan (US$71.3 billion), after a 5.3 percent increase in March, the National Bureau of Statistics said yesterday.
Profit in the first four months increased 11.4 percent to 1.61 trillion yuan, the agency said, down from a 12.1 percent pace in the first quarter.
Stronger profit growth may spur investment in factories and equipment, helping sustain growth in the world’s second-biggest economy as the government avoids adding stimulus.
Stocks in China have dropped 6 percent since this year’s high on Feb. 6 and a survey last week showed manufacturing is contracting this month for the first time since October last year.
“The data point to a stabilization of industrial profit growth at a lower level,” consistent with recent momentum in economic expansion, said Ding Shuang (丁爽), senior China economist at Citigroup Inc in Hong Kong.
“If growth decelerates toward 7 percent and unemployment pressure mounts, more policy easing is likely,” including an interest rate cut, Ding said.
Industrial companies’ revenue rose 11.9 percent in the first four months to 30.4 trillion yuan, the bureau’s statement said, after a previously reported 11.9 percent increase in the first quarter.
The agency said three industries drove profit growth in the latest report: electric and thermal power production, autos and computers, telecommunications and other electronic equipment.
China’s growth unexpectedly slowed to 7.7 percent in the first quarter from a year earlier. The median estimate in a Bloomberg News survey this month was for second-quarter growth of 7.8 percent, down from 8 percent in last month’s poll.