Decline of China‘s Industrial Profits Keeps Slowing

With the gradual recovery in April 2020, China’s industrial profits declined at a slower rate compared to the previous month. For the first four months of 2020, total profits (total revenues minus total costs) of industrial enterprises decreased by 27.4% y/y, compared to a 36.7% y/y plunge in January-March. In April alone, industrial profits dropped by 4.3% y/y, compared to a plunge of 34.9% y/y in March, which suggests that industrial enterprises’ profitability is improving significantly.

For the first four months of 2020, total profits (total revenues minus total costs) of industrial enterprises decreased by 27.4% y/y

The data published by China’s National Bureau of Statistics shows that manufacturing continued to improve, registering a 26.8% y/y decline of total profits, less steep than the 38.9% y/y drop for the first three months of 2020. Essentially, an improvement is observed among 26 of the 30 sub-industries in manufacturing.

Utilities followed similar pattern, recording a 24.3% y/y decline in April, less steep than the period from January to March.

manufacturing continued to improve, registering a 26.8% y/y decline of total profits, less steep than the 38.9% y/y drop for the first three months of 2020

Mining, on the other hand, witnessed total profits decreasing further by 35.2% y/y in January-April, the largest fall since the COVID-19 outbreak. The deterioration in mining is mainly driven by lower producer prices and sluggish demand of midstream and downstream industries, as the COVID-19 pandemic is still hurting the economies around the world.

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