© Reuters. FILE PHOTO: Workers weld bicycle rims at a sports equipment factory in Hangzhou, Zhejiang
Shanghai (Reuters)-In May, the profits of Chinese industrial companies rose for the first time in six months, which shows that the country’s economic recovery is receiving attention, and manufacturing investment and employment prospects are brighter.
According to the National Bureau of Statistics of China, the profits of Chinese industrial enterprises increased by 6% year-on-year in May to RMB 582.3 billion (US$ 82.28 billion).
Following a 4.3% decline in April, the rebound was the largest monthly increase since March 201
After removing strict virus containment measures for several weeks of near paralysis, China’s economic activity is clearly improving. However, due to concerns about the second wave of infections and the global economic recession, the recovery has been uneven, and domestic and foreign demand remains sluggish.
Zhu Hong, a senior statistician at the Bureau of Statistics, said in a statement that despite the good revenue growth in May, “market demand is still relatively weak in the epidemic, and the sustainability of profit recovery is worth further observation.”
The gains from Chinese factories were hit by the largest ex-factory price decline in more than four years since May, while exports fell again, eliminating a brief increase in April.
As the government promotes more infrastructure projects, steel futures prices have risen this year. Due to rising steel production and thin demand from downstream users, concerns about oversupply of steel have caused steel futures prices to fall last week.
From January to May 2020, the profits of industrial enterprises were 1.84 trillion yuan, a year-on-year decrease of 19.3%.
Profit growth in May benefited from massive profit recovery in key industries such as refineries, power, chemicals and steel.
For example, the oil refining industry achieved a profit of 11.6 billion yuan in May, a year-on-year increase of 8.9%, and a loss of 21.8 billion yuan the previous month. Profits in the power sector increased by 10.9% in May, but fell by 15.7% in April.
Zhu also attributed the profit growth in May to the alleviation of cost pressures, the increase in profit margins, the positive impact of policy stimulus and higher return on investment.
Statistics from the National Bureau of Statistics show that from January to May, the revenue of China’s state-owned industrial enterprises fell by 39.3% year-on-year, compared with 46.0% in the first four months.
Private sector profits fell by 11% in the first five months, narrowing to a 17.2% decline from January to April.
At the end of May, the liabilities of industrial companies increased by 6.6% year-on-year, compared with an increase of 6.2% at the end of April.
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