China's industry profit growth slows for 6th month

BEIJING • Profit growth at China's industrial firms cooled for a sixth straight month in October as factory prices and the pace of sales increases softened amid mounting uncertainties from the trade war.

China and the United States have slapped tariffs on billions of dollars of each other's goods, hurting manufacturing and casting a shadow on the outlook for global growth.

Industrial profits rose 3.6 per cent last month from a year earlier to 548 billion yuan (S$108.5 billion), a seven-month low and slowing from September's 4.1 per cent gain, the National Bureau of Statistics said yesterday.

The slowdown was largely due to cooling factory-gate inflation and a high base effect, it stated.

Some analysts believe profitability will continue to deteriorate in the coming months.

Nomura economists said the trend will remain down, "given weakening domestic demand, already-high financing costs, rising credit defaults and the escalation in the China-US trade conflict".

Factory-gate inflation has been easing in recent months on sluggish demand, despite government efforts to shore up the economy.

Last month's profit data came as worries about the trade war were deepened by US President Donald Trump's comments before his meeting with Chinese President Xi Jinping in Argentina late this week. Mr Trump said on Monday it was "highly unlikely" he would accept Beijing's request to hold off on increasing tariffs on US$200 billion (S$275 billion) of Chinese goods to 25 per cent from 10 per cent, planned for Jan 1.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 28, 2018, with the headline 'China's industry profit growth slows for 6th month'. Print Edition | Subscribe