© Reuters. FILE PHOTO: A worker welds a bicycle steel rim at a factory manufacturing sports equipment in Hangzhou, Zhejiang province, China September 2, 2019. China Daily via REUTERS/File Photo
BEIJING (Reuters) – China’s industrial profits extended this year’s double-digit pace of declines into a sixth month as waning demand took a toll on companies’ profit margins, bolstering the case for additional policy support measures.
The year-to-date 16.8% fall followed an 18.8% profit decline in January-May, and reinforced a frail economic recovery that brought weaker-than-expected 6.3% growth in the second quarter.
In June alone, industrial earnings shrank by 8.3%, according to data from the National Bureau of Statistics (NBS) on Thursday. Profits were down 12.6% in May.
The struggles confronting Chinese manufacturers were typified by Maanshan Iron and Steel, a major steelmaker, which forecast in mid-July that it would swing to a net loss of 2.24 billion yuan ($314.1 million) for the first half-year from a net profit of 1.43 billion yuan a year earlier.
China’s top leaders on Monday pledged to step up policy support for the economy and acknowledged a “tortuous” post-COVID recovery, but analysts saw few signs that aggressive stimulus was likely while concerns are mounting over debt risks.
Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.79 million) from their main operations.
($1 = 7.1320 )