Industrial firms posted a second month of weak earnings in December, as slowing price growth and a dip in orders continue to add pressure to the sector, Reuters reports.
Profits shrank by 1.9% last month compared with a year earlier to Rmb 680.8 billion ($100.9 billion), according to data from the National Bureau of Statistics. This followed a 1.8% decline in November, which marked the first contraction in several years.
China’s factories face multiple headwinds as producer price growth slows and weaker demand both at home and abroad weighs on new orders. With nationwide economic growth at its lowest in almost three decades, profits in the sector appear likely to continue falling.
“As far as the future trend is concerned, it is quite obvious that it will continue to decline because the (producer price index) has apparently turned negative last month, and when PPI has turned negative, the profits of industrial enterprises will go down,” said Tang Jianwei, senior economist at Bank of Communications in Shanghai.