SHANGHAI (Reuters) – Profits for Chinese industrial companies rose for the first time in six months in May, indicating that the economic recovery is gaining momentum and improving investment and job prospects in the sector.
China’s national statistics bureau said the profits of industrial companies in May rose 6 percent year on year to 582.3 billion yuan (82.28 billion dollars), according to a statement released on Sunday.
This followed a 4.3 percent drop in April, which is also the largest monthly increase since March 2019.
Economic activity in China has clearly improved since the crackdown on strict virus containment measures that hit businesses almost paralyzed for weeks. But the recovery is not balanced and demand remains weak at home and abroad amid fears of a second wave of injuries and a global recession.
“Despite the growth in May, market demand remains relatively weak in light of the epidemic, and the sustainability of the profit recovery calls for further follow-up,” said Zhou Hong, chief statistical officer of the bureau, in the statement.
Chinese factory profits were affected by the biggest drop in factory door delivery prices in more than four years in May, while exports fell again, erasing an unprecedented gain in April.
In the first five months of 2020, profits of industrial companies declined 19.3 percent from the same period last year to 1.84 trillion yuan.
May’s earnings growth was supported by a recovery in profits in major industries such as oil refining, electricity, chemicals and steel.
(Dollar = 7.0770 Chinese yuan)