Profits at industrial firms in China continued to decline in the first 10 months of the year, weighed down by COVID-19 restrictions and falling factory-gate prices.
Industrial profits from January to October fell 3.0 percent from a year earlier, data from the Chinese National Bureau of Statistics showed yesterday.
That compares with a decline of 2.3 percent in the first nine months. The bureau has not released single-month data since June.
Photo: Bloomberg
“The structure is in general improved, while the profit is dropping,” the bureau said in an interpretation statement that accompanied the data. “The COVID-19 outbreaks in China and the recession risks of the global economy may add more pressure to the recovery of industrial profits.”
COVID-19 restrictions were tightened last month as outbreaks began to spread in regions including Guangdong Province, a major manufacturing region, curbing business and consumer activity. Global demand has also slowed severely, leading to an unexpected contraction in exports last month.
Businesses are struggling to raise prices as deflation hits, putting a squeeze on profit margins. Producer prices last month contracted for the first time in almost two years, largely due to falling global commodity prices and weakening domestic demand as COVID-19 restrictions spread.
Jones Lang Lasalle Inc chief economist Bruce Pang (龐溟) said yesterday in a statement on the WeChat messaging app that destocking by industrial companies has slowed down, which could be related to industrial supply-chain stability.
Turnover days for products and the average payback period of accounts receivable were 18.2 days and 54.6 days respectively at the end of last month, an increase of 0.2 days and 0.6 days from that of end-September, Pang said.
The prospect of a difficult and slow reopening of the country has led some economists to downgrade their growth forecasts.
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