May profit growth slowed from April even as the January-May gain edged higher, with electronics and upstream industries outperforming while automakers and furniture makers lagged.
China’s industrial firms posted an 18.8% year-on-year rise in profits in January-May, up from 18.2% in the first four months, while May profits increased 21.1% from a year earlier after a 24.7% gain in April. The figures point to a still-solid but moderating pace of earnings growth in an economy relying on factory output and exports to offset weak domestic demand. Sector performance was highly uneven: profits at manufacturers of computers, communication and electronic equipment surged 103.9% in January-May, accounting for 43.1% of the total increase in industrial profits, while non-ferrous metal ore mining and processing profits rose 93.9%. By contrast, automakers’ profits fell 19.8% and furniture makers’ profits dropped 58.4%. Analysts said the divergence reflects stronger pricing and demand in upstream and technology-linked industries, while downstream manufacturers remain under pressure from cost strains and soft consumption. The data comes as policymakers weigh targeted support for corporate profitability and credit demand remains weak.