China’s industrial profits pick up in March with 13.9% rise

Monday, 29 April 2019 00:08 - - {{hitsCtrl.values.hits}}

BEIJING (Reuters): Profits at China’s industrial firms grew in March, rebounding from four months of contraction, adding to optimism the world’s second-largest economy may be starting to stabilise.

A return to profits could add to the debate over how much more stimulus Beijing needs to pump into the economy if it is on the mend.

Beijing and Washington appear to be edging towards a trade deal, but investors are concerned that a sharp slowdown in China will have repercussions on the wider global economy.

Profits in March rose 13.9% year-on-year to 589.52 billion yuan ($87.62 billion), the National Bureau of Statistics (NBS) said on its website on Saturday, recovering from a 14% fall in the first two months.

That marked the biggest monthly increase since July 2018.

For the first quarter of the year, profits notched up by industrial companies dropped 3.3% to 1.3 trillion yuan compared with a year earlier, according to the NBS. The growth in March mainly came from an acceleration in production and sales, as well as a recovery of profits in key industrial sectors, Zhu Hong of the statistics bureau said in a statement accompanying the data.

The pick-up in industrial profits eased concerns about the slowing momentum in China’s economy as it has been cooling for the past year, weighed down by a bitter trade dispute with the United States, as well as a campaign to curb debt risks that has led to higher financing costs for companies. The Government has ramped up stimulus measures this year, announcing billions of dollars in additional tax cuts and infrastructure spending. Growth in China’s industrial output increased at the fastest pace since July 2014 in March, while gross domestic product grew 6.4%, beating expectations.

Producer prices, in the meantime, also picked up for the first time in nine months in March, lifted by higher global commodity prices and Government efforts to boost domestic demand.