China industrial profits jump 24.7% in April

Source Credit : Portfolio Prints

China’s industrial profits jumped 24.7% in April from a year earlier, official data showed on Wednesday, even as broader indicators pointed to slowing economic momentum.

The gain marked the strongest growth since November 2023, according to Wind Information, accelerating from a 15.8% increase recorded in March.

Industrial profits for the first four months of the year rose 18.2%, up from 15.5% growth in the January-March period. The computing and electronics equipment manufacturing sector — the country’s largest by total profits — saw earnings more than double from a year earlier, although the pace of expansion eased slightly in April on a year-to-date basis.

Among the ten biggest industries by profit, the oil and gas extraction sector posted an 8.1% increase in earnings during the January-April period, reversing a 1.4% decline seen in the first quarter.



Elevated crude oil prices also boosted profitability in petroleum processing, where profits surged to 40.42 billion yuan ($5.96 billion) in the first four months of the year, nearly doubling from 22.94 billion yuan reported through March.

Losses in the automobile industry showed signs of moderating, with profits down 16.8% from a year earlier, compared with a steeper 17.7% decline in the first quarter.

Beijing’s campaign to curb excessive competition in sectors such as automobiles is beginning to show results, according to Jens Eskelund, president of the European Union Chamber of Commerce in China. Speaking to reporters on Tuesday, he cited an earlier survey of member companies but cautioned that it could take another one to two years to determine whether the trend is sustainable.

A fivefold surge in profits from mining and related industries also supported overall industrial earnings growth. Meanwhile, iron smelting and rolling operations returned to profitability by April after posting losses in the first quarter.

Not all sectors benefited from the rebound. Profit declines in furniture manufacturing deepened sharply, with earnings falling 54.4% in the first four months of the year, worsening from a 44.9% drop recorded through March.

“China’s industrial profit growth accelerated sharply in April, driven primarily by rising producer prices amid the global energy shock,” said Hao Zhou, head of research and chief economist at Guotai Junan International.

“However, the improvement in profitability appears uneven and potentially fragile. Profit gains are concentrated in upstream and high-tech sectors, while many other industries continue to struggle,” Zhou said in a research note.

The profit data comes against the backdrop of moderating economic activity. China’s industrial output rose 4.1% in April from a year earlier, while retail sales edged up just 0.2%. Fixed-asset investment contracted in the first four months of the year as weakness in the property sector intensified.

Trade, however, remained a bright spot. Exports climbed 14.1% in April from a year earlier in U.S. dollar terms, while imports surged 25.3%, according to data released earlier this month.

China’s producer price index rose 2.8% in April from a year earlier — the fastest pace since July 2022 — highlighting the growing impact of higher global energy costs on industrial activity.