(Reuters) Profits at China’s industrial firms grew robustly in November for a seventh month of gains, supported by strong industrial production and sales, as manufacturers continue their recovery from the Covid downturn.
Profits at Chinese industrial firms rose 15.5% from a year earlier (yoy) to 729.32 billion yuan ($111.50 billion), easing from October’s three-year high 28.2%, data from National Bureau of Statistics showed on Sunday.
China’s industrial sector has seen a strong rebound from the shock of the Covid pandemic, aided by a stunning export comeback as factories ramp up to meet demand overseas. Factory-gate prices, a gauge for profitability, fell less than expected last month.
The pullback of growth in November was mainly due to a higher base a year earlier, said Zhu Hong, a senior statistician at the statistics bureau.
“Profits at some traditional industries have showed improvement. With the approach of heating season, demand for thermal coal has risen and prices have increased, leading to an accelerated recovery in the coal sector,” Zhu said in a statement.
The profit growth of computers and communication products rose the highest at 51% yoy in November, reversing sharply from -7% in October mainly on a low base.
Electrical machinery and equipment followed by accelerating 29% yoy from 7% in October.
In contrast general equipment manufacturing moderated to 16% yoy in November from 22% in October, and automobile manufacturing profits rose 13% yoy in November, moderating from 35% in October.
But coal industry profits reported this year's first increase at 9.1% in November, on rising heating demand in winter and higher coal prices.
For the January-November period however, industrial firms’ profits rose 2.4% from a year earlier, accelerating from the 0.7% gain recorded for the first 10 months.
Earnings at China’s state-owned industrial firms were down 4.9% for January-November, narrowing from the 7.5% decline in the first 10 months.
“Industrial profits are expected to maintain double-digit growth over the next few months, driven by low base effects, domestic economic recovery, improvements in overseas demand and the rebound in commodity prices benefiting the upstream sector,” said analyst Zhou Maohua at China Everbright Bank.
Private sector profits grew 1.8% in the January-November period, up from 1.1% in January-October.
The industrial profit data covers large firms with annual revenue of over 20 million yuan from their main operations.
(With reporting by Goldman Sachs)