Earnings growth at China's industrial firms in November fell for the first time in nearly three years in the face of slackening domestic and external demand, highlighting rising risks to the world's second-largest economy.
The gloomy data points to a further loss of economic momentum as a trade dispute with the United States piles pressure on China's vast manufacturing sector and as firms, bracing for a tough year ahead, shelve their investment plans, executives say.
Industrial profits fell 1.8 percent in November from a year earlier to 594.8 billion yuan ($86.33 billion), the National Bureau of Statistics (NBS) said on its website on Thursday. It marked the first decline since December 2015. For the first eleven months, profits at industrial firms rose 11.8 percent from the same period a year earlier to 6.1 trillion yuan, slowing from a 13.6 percent increase in January-October.
The decline in profits largely reflected slowing growth in sales and producer prices as well as rising costs, He Ping of the statistics bureau said in a statement accompanying the data. Economists expect earnings to continue to worsen next year, weighed down by smaller gains in industrial prices in the face of cooling demand, with some even warning of the risk of deflation.
In November, China's factory price growth slowed to the weakest pace in two years as domestic demand lost further momentum.