(Bloomberg) — Profits at Chinese industrial enterprises surged at the fastest pace in a single month in almost nine years in October, a further sign the economic recovery is gathering pace.
Industrial profits rose for a sixth straight month, climbing 28.2% in October from a year ago, data from the National Bureau of Statistics showed Friday. For the first 10 months of the year, profits rose 0.7%.
The acceleration was mainly due to a low base in the same period last year and an increase in investment income this month, the statistics bureau said. Zhu Hong, an economist at the bureau, cautioned that profits may come under pressure going forward.
“We should note that the growth rate of industrial enterprises’ accounts receivable has risen, and the pressure on cash flow has increased, which bodes ill for the continuous recovery of companies’ production and operation,” Zhu said in a statement.
What Bloomberg Economics Says…
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“Looking ahead, we expect profits to remain strong in the coming quarter or two, though the pace of growth may slow. The recovery in household consumption and strong export performance should remain supportive, countering downward pressure from deflation in producer prices.”
— David Qu, China economist
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Profits at state-owned industrial enterprises fell 7.5% on year in the first 10 months of the year, while private firms’ grew 1.1%.
China doesn’t release this data for January and February separately, but combines those months to smooth out volatility surrounding the lunar new year.
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