China's industrial profits soared last month, helped by favorable year-ago comparisons and a raft of stimulus measures aimed at reinvigorating an economy that has struggled with deflationary concerns.
Profits jumped 29.5 percent, sharply accelerating from October, according to official data published yesterday. Companies also recorded large investment returns in November, further boosting their bottom line, the National Bureau of Statistics said.
Despite initial expectations that lifting the curbs would see the economy roar back to life, profits for China's big industrial companies from January-November were still down 4.4 percent, although that's eased from a 7.8 percent decline through the first 10 months.
"As macro policies take effect and domestic demand gradually recovers, the rebound in industrial production picked up and industrial firms' profit continued to improve," NBS analyst Yu Weining said.
The November profits reflect an improvement in upstream industries due to price increases and restocking in some sectors, said Xing Zhaopeng, a senior strategist at Australia & New Zealand Banking Group. However, the "big picture is that destocking cycle has yet to reach the end. We need a bottom of inventories to confirm a turnaround of the growth outlook," he added.
The profit data adds to mixed signals on the economy. While industrial output exceeded estimates, consumer prices posted the steepest drop in three years while declines in factory-gate costs accelerated. New orders received by manufacturers shrank to the lowest since June and factories scaled back input purchases for a second straight month.
This came after the State Council appointed Lu Lei deputy governor of the People's Bank of China. Lu, 53, replaces Liu Guoqiang. Liu turned 60 in June, reaching the general retirement age for officials at the vice-ministerial level.
Bloomberg
