Industrial profits rebounded in June as many China factory operations restarted after a two-month pandemic-related shutdown, but prospects of further closures have spooked businesses.
Data released on Wednesday showed that factory profits grew 0.8% compared with a year earlier, rebounding from a 6.5% decline in May, according to the National Bureau of Statistics (NBS).
Buoyed by easing pandemic curbs and government stimulus, June’s data shows industrial firms are gradually coming back from painful supply chain disruptions in the second quarter.
As the pandemic was effectively controlled and the industrial chain further recovered, industrial firms’ efficiency improved markedly, NBS senior statistician Zhu Hong said in a statement.
Colossal Toll On Business Activity
China’s economy braked sharply in the April-June quarter, highlighting the colossal toll on activity from widespread lockdowns that hit domestic consumption and business confidence.
Industrial firms saw their combined profits rise 1% to 4.27 trillion yuan ($631.1 billion) in January-June from the same period a year earlier. That matched the 1% growth pace in the first five months, the data showed.
Liabilities at industrial firms jumped 10.5% at end-June, also remaining the same as the 10.5% growth as of end-May.
In June, China’s industrial output grew 3.9% from a year earlier, while factory-gate inflation hit a 15-month low as the country continues to buck the global trend of accelerating prices.
Factory activity in the Shanghai region has gradually recovered from a two-month citywide Covid-19 lockdown. Tesla achieved its highest monthly output at its Shanghai plant in June since it opened in 2019.
- Reuters, with additional editing by George Russell