China’s industrial profits fall by 10% in October as deflation worries linger

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China’s industrial profits fall by 10% in October as deflation worries linger

A large number of machinery and vehicles are ready for shipment at the dock of the Oriental Port Branch of Lianyungang Port in Lianyungang, China, on September 27, 2024. 

Costfoto | Nurphoto | Getty Images

China’s industrial profits dropped by 10% in October from a year ago, in another sign that Beijing’s stimulus measures have yet to reverse a slump in corporate earnings.

That followed a 27.1% year-on-year decline in September, the steepest plunge since March 2020. Industrial profits are a key gauge of the financial health of factories, mines and utilities in China.

In the first ten months, profits at China’s industrial firms decreased by 4.3% from a year ago,

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. That was compared with

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in the first nine months.

Recent data indicates that Beijing’s latest stimulus measures have already helped some sectors of the economy, but not enough to offset persistent deflationary pressures.

China’s

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slower than expected,

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from a year ago, marking the slowest rise since June. Meanwhile, producer price index fell 2.9% on year, showing that deflation deepened from the 2.8% drop in the prior month.

The country’s industrial production also grew slower than expected. Among fixed asset investment, real estate declined by 10.3% for the year through October, a sharper decline than the 10.1% seen in the ******* through September.

On the brighter side, October retail sales beat expectations with a 4.8% year-on-year growth, and the unemployment rate ticked lower to 5%, down from 5.1% in September.

The world’s second largest economy grew at its slowest pace in the third quarter since early 2023, as it grappled with lackluster domestic consumption and a prolonged housing downturn.

Since late September, ******** authorities have ramped up stimulus announcements to prop up the faltering economy and achieve the government’s growth target of “around 5%.”

China is scheduled to release its official manufacturing purchasing managers’ index for November on Saturday. The official PMI is expected to come in at 50.3, according to a Reuters poll of economists, a slightly larger expansion than 50.1 in October.

A reading above 50 indicates expansion in activity while one below that level suggests a contraction.

— CNBC’s Evelyn Cheng contributed to this report.

This is a breaking story, please check back later for updates.

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