China's Industrial Profits Down 7% on Weak Demand in November

China’s industrial profits fell by 7% in November, according to official data released on Friday, but that was slightly better than October for a sector battling soft domestic demand.

Weak household demand has hit the world’s second-largest economy, which has battled to achieve a strong post-pandemic revival, amid a prolonged housing downturn and fresh trade risks from the incoming Trump administration.

Data from the Bureau of Statistics showed that industrial profits fell 7.3% in November from the same month last year, following a 10% drop in October.

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The narrower decline in November pointed to improved profits as recent economic stimulus measures start to have an effect, Zhou Maohua, a macroeconomic researcher at China Everbright Bank, said.

The profit numbers were also in line with a slower decline in factory-gate prices in November. The producer price index fell 2.5% year-on-year versus the 2.9% drop in October.

However, there was some positive news this week, with the World Bank on Thursday revising up its 2024 economic growth forecast for China slightly to 4.9% from its June forecast of 4.8%.

Still, in the first 11 months of 2024, industrial profits declined 4.7%, deepening a 4.3% slide in the January-October period, reflecting still tepid private demand in the Chinese economy.

A spate of economic indicators released this month pointed to mixed results, with industrial output accelerating in November while new home prices fell at the slowest pace in 17 months.

The industrial sector is undergoing an uneven recovery amid insufficient demand, Zhou said, pointing to difficulties facing real estate and some related industries as evidence of this malaise.

China’s leaders vowed in a key policy meeting this month to raise the deficit, issue more debt and loosen monetary policy to maintain a stable economic growth rate. The government also recently pledged to step up direct fiscal support to consumers and boosting social security.

Beijing has agreed to issue a record $411 billion special treasury bonds next year, Reuters reported.

Profits at state-owned firms fell 8.4% in the first 11 months, foreign firms posted a 0.8% decline and private-sector companies recorded a 1% fall, according to a breakdown of the NBS data.

Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.7 million) from their main operations.