Profits at China's industrial firms extended a double-digit drop for the first eight months, but the pace of declines eased slightly as a flurry of policy support steps has started to stabilise parts of the stuttering economy.
The 11.7% year-on-year fall in profits narrowed from a 15.5% contraction for the first seven months, in line with expectations and potentially suggests a modest recovery is beginning to take root for some businesses.
That was backed up by August earnings posting a surprise surge of 17.2% from a year earlier, data from the National Bureau of Statistics (NBS) showed on Wednesday. Profits were down 6.7% in July.
"This data reflected that domestic demand has stabilised and the demand and supply side has seen balanced recovery," said Bruce Pang, chief economist at Jones Lang Lasalle.
NBS statistician Yu Weining said in an accompanying statement that "a series of policies to promote macroeconomic recovery" last month's underpinned earnings.
Profits improved for 30 of 41 major industrial sectors during the period, with the losses in raw material manufacturing industry narrowing significantly on rising commodity prices and recovered demand. NBS didn't provide comparative data for January-July.
As Beijing steps up policy support for its faltering economy after a brief post-COVID recovery, recent data have shown signs of stabilisation with stronger-than-expected bank lending, industrial output and retail sales growth for August.
Still, persistent weakness in the crisis-hit property sector that accounts for one-fourth of the world's second largest economy remains a drag on growth.
Last month, China's new home prices fell at the fastest pace in 10 months. Eased borrowing rules are showing signs of providing some major cities like Beijing a boost in new home sales, but worries remain that the improvement might be short-lived.
The concern is that depressed confidence in the real estate sector could undermine the overall demand outlook for businesses and the economy.
The breakdown in NBS data indicated that there was still some way to go for a robust recovery in overall earnings growth.
Profits at state-owned firms slid 3.8% in first eight months, and fell 1.3% for foreign firms while private-sector companies saw earnings shrink 6.1%, the data showed.
Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.75 million) from their main operations.
