China’s industrial profits grew for the second straight month and at the fastest pace in a year, which points directly to signs of economic recovery after the coronavirus crisis..

Monday the national bureau statistics said that profits of China’s industrial enterprises rose 11.5% year-on-year in June to 666.55 billion yuan ($ 95.27 billion), the fastest profit growth since March 2019..

May marks the sector’s first monthly revenue growth since November before the coronavirus pandemic.

In January-June, industrial profits fell 12.8% year-on-year to 2.51 trillion yuan, down 19.3% in the first five months of the year..

After a record downturn earlier in the year, the Chinese economy recovered more than expected in the second quarter following the end of the pandemic response and policymakers increased stimulus. At the same time, analysts warn that the recovery is highly dependent on public investment, while domestic and global demand remains weak..

Steel, oil and gas, refining and non-ferrous metals showed significant increases in profit in June with lower operating costs and higher demand, said Zhu Hong, official representative of the bureau of statistics.

Zhu warned of the outlook as market demand remains weak amid the effects of the COVID-19 pandemic and international trade is «difficult and serious». Uncertainty remains about the sustainability of profit growth, analyst says.

China's industrial profit growth accelerates, signaling economic recovery

Major manufacturers of medical equipment and pharmaceutical raw materials, including Zhejiang Nhu and Zhejiang Yueyue, said they expect higher profits in the first six months due to higher sales.

Market indicators ranging from the health of factories to producer prices reflect signs of further growth in output, but analysts say it may be difficult for factories to maintain momentum as pent-up demand decreases, competition for export markets and severe floods disrupt construction and other economic activity in the region. Yangtze Delta.

Rising inventories and sluggish demand could also affect profits.

State-owned Chinese manufacturing revenues fell 28.5% year-on-year in the first six months, after falling 39.3% in Jan-May, according to the Bureau of Statistics..

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