Cooling factory-gate inflation, high-base effect responsible for slowdown
Profits in China's major industrial firms grew 13.6 percent year-on-year in the first 10 months of 2018, down from the 14.7-percent expansion for the January-September period, the National Bureau of Statistics (NBS) said on Tuesday.
Industrial profits rose 3.6 percent in October from a year earlier to 548 billion yuan ($78.92 billion), a seven-month low and a decrease from September's 4.1 percent gain, the NBS said on Tuesday.
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 uncertainties stemming from the China-US trade war.
China and the US have slapped tariffs on billions of dollars of each other's goods, hurting manufacturing and casting a shadow on the outlook for global growth.
The slowdown was largely due to cooling factory-gate inflation and a high-base effect, NBS official He Ping said in a statement.
Some economists believe profitability will continue to deteriorate in the coming months.
Economists at Japan's Nomura 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, including a flurry of credit-easing measures to boost lending to private firms and ramp up infrastructure spending.
China faces slower economic growth thanks to the trade war plus efforts to rein in financial risks and tackle pollution problems.
On Monday, Chinese iron ore futures tumbled nearly 6 percent and steel prices dropped to the lowest in almost five months as worries over weaker steel demand fueled a sell-off, with raw materials coking coal and coal also down sharply.
Tuesday's profit data showed industrial firms' revenue growth slowed to 9.4 percent in the first 10 months from a 9.6 gain in January-September.
Upstream sectors such as mining and metal producers and State-owned enterprises (SOEs) still commanded the lion's share of profit gains, but their growth softened in October. Profit gains were concentrated in five industries, including steel and building materials.
Profits earned by SOEs grew 20.6 percent in October from a year earlier, from 23.3 percent in September.
Shenzhen Energy Group, the southern Chinese city's largest power producer whose main products include electric power, gas and steam, reported an 83.3 percent decline in net profits for the third quarter.
For the first 10 months, profits for China's industrial firms rose 13.6 percent from a year earlier, versus a 14.7 percent increase in January-September.
At the end of October, industrial firms' liabilities increased 5.9 percent from a year earlier to 63.7 trillion yuan, according to the NBS.
