BEIJING (Reuters) – Profits at China’s industrial firms grew at a weaker pace in August from a year earlier, slowing for a sixth consecutive month, as manufacturers struggled with high commodity prices, COVID-19 and shortages in some key components.
Profits rose 10.1% on year to 680.3 billion yuan ($105 billion) last month compared with a 16.4% gain in July.
Momentum in the world’s second-biggest economy has weakened in recent months with its vast manufacturing sector buffeted by gathering headwinds.
Industrial production rose in August at its slackest pace since July 2020, weighed by domestic COVID-19 outbreaks, high raw material prices, a campaign by Beijing to cut carbon emissions and a persistent shortage in parts such as semiconductors.
For the January-August period, industrial firms’ profits rose 49.5% year-on-year to 5.61 trillion yuan, slowing from a 57.3% increase in the first seven months of 2021.
Commodity prices have remained elevated in recent months, hurting the bottom-lines of many medium-sized and downstream factories.
China’s cabinet, or government, last week vowed to step up policy coordination to counter challenges from sporadic coronavirus cases and high commodity prices.
Further dimming the outlook for manufacturers, China has tightened controls on power usage by energy-intensive firms in recent weeks, triggering electricity cuts across regions and hurting production.
Liabilities at industrial firms rose 8.4% on an annual basis at end-August, up from 8.2% growth as of end-July.
The industrial profit data covers large firms with annual revenues of over 20 million yuan from their main operations.
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