Economic Watch: China's industrial structural adjustment proceeds, profit growth slows
Profit growth of major industrial firms slowed to 16.2 percent in the first eight months of 2018 from a rise of 17.1 percent for the January-July period, data from the National Bureau of Statistics (NBS) showed Thursday.
Profit at 34 of the 41 sectors surveyed rose compared with one year earlier, up from 32 for January-July.
Profit growth accelerated in electrical machinery manufacturing and agricultural product processing, but slowed in ferrous and non-ferrous metal smelting and pressing as well as chemical material production.
Manufacturing, which accounted for 84.5 percent of the total industrial profits, saw the sector's combined profits expand 13.5 percent. The mining industry's profit surged 53.2 percent, while those of power generation, heating, fuel gas, water production and supply companies went up 13.5 percent.
Overseas-funded industrial firms recorded faster profit growth compared with the January-July period, while profit growth at state holding enterprises declined.
Industrial profits rose 9.2 percent year on year to 519.69 billion yuan (75.76 billion U.S. dollars) in August, with the pace of growth down from 16.2 percent in July.
NBS official He Ping attributed the slowdown in August to a higher comparative base from last year and a pullback in the growth of revenues and product prices.
"We continue to see headwinds to industrial profit growth in the rest of the year, based on our expectation of gradual moderation in industrial production growth as well as potentially slower PPI inflation," Goldman Sachs analyst Maggie Wei said in a report.
Industrial output rose 6.1 percent year on year in August, 0.1 percentage point higher than in July.
Although industrial profits rose at a slower pace, He Ping said supply-side structural reform has led to falling operating costs and leverage ratios, while industrial companies' profitability continued to improve.
In the first eight months, cost per 100 yuan of revenue dropped 0.35 yuan from the same period last year to 84.39 yuan. The debt-asset ratios of major industrial firms dropped 0.5 percentage point year on year to 56.6 percent by the end of August.
He said progress has been made in structural transformation. Profit of consumer goods production and high-tech manufacturing both increased at faster pace.
Thursday's data were the latest in a slew of economic indicators that showed China's economy remained resilient despite growing external uncertainty.
Earlier data showed growth in industrial production, retail sales and freight traffic all picked up last month, pointing to a firming real economy.
The country's economy expanded 6.7 percent year on year in the second quarter, above the target of around 6.5 percent set for 2018.