(Bloomberg) -- China’s industrial firms saw profits decline for the third straight month, as worsening producer price deflation and sluggish factory output overshadowed the impact of recent stimulus measures.
Industrial profits at large Chinese companies fell 10% last month compared to a year ago, following a sharper 27.1% decline in September, the National Bureau of Statistics said in a statement Wednesday. Bloomberg Economics had forecast the year-on-year drop to be around 20%.
Profits shrank 4.3% in the first 10 months compared to the same period in 2023, on track for a third annual decline.
The earnings provide the first evidence of how business balance sheets have fared during a full month of activity following Beijing’s largest effort to boost the economy since the pandemic. Industrial profits are a key measure of the financial health of factories, mines and utilities that can affect their investment decisions in the months to come.
“Although profits at large-scale industrial enterprises remain in decline, the quicker implementation of existing policies and the introduction of a package of incremental measures have led to some improvement in their performance,” the statistics bureau said in the statement.
Corporate finances have become more strained as China contends with weak domestic demand and its longest period of deflation since 1999. Producer prices unexpectedly fell at a faster rate in October and industrial output stagnated.
Still, signs have emerged that point to a tentative recovery and improving confidence after measures ranging from monetary easing to support for the real estate sector since late September. Infrastructure investment was steady and the urban jobless rate fell in October to the lowest in four months.
Yet new challenges are arising following Donald Trump’s win in the US presidential election this month. His threat of steep tariffs on Chinese goods risks wreaking further havoc on the Asian country’s export sector, which already faces greater trade barriers from regions like the European Union.
--With assistance from James Mayger.
(Updates with more details throughout)
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