Profits of industrial enterprises above designated size fell 12.6% year on year in May, down 5.6 percentage points from April and down for three consecutive months, according to data released by the National Bureau of Statistics on Wednesday. In the first five months of the year, industrial profits fell 18.8%, 1.8 percentage points narrower than the decline in the first four months of the year.

Sun Xiao, statistician of the Industrial Department of the National Bureau of Statistics, said that the profits of industrial enterprises continued to recover, but it is also necessary to see that the external environment is becoming more complex and severe, domestic demand is still insufficient, restricting the further recovery of corporate profits, and the foundation for the recovery of industrial enterprises is still not solid. Next, we must focus on expanding effective demand, improve the level of connection between production and marketing, deeply implement the innovation-driven development strategy, and constantly enhance the momentum of development to promote the continued consolidation and recovery of the industrial economy.

Statistics Bureau data show that in May, the equipment manufacturing industry profit growth of 15.2%, two consecutive months to maintain double-digit growth, driving the industrial profit growth of 4.6 percentage points, is the largest contribution to the industry sector. By industry, the profit of the automobile manufacturing industry increased by 1.02 times due to the rapid growth of automobile sales, the booming production and sales of new energy vehicles, and the increase in investment returns. The electrical machinery industry was driven by new energy products such as photovoltaic equipment and lithium-ion batteries, and its profit increased by 27.3%.

1756-RM

1756-RM

In addition, with the continuous recovery of consumer demand, the decline in profits of the consumer goods manufacturing industry was sharply narrowed by 17.1 percentage points compared with April, driving the decline in industrial profits to narrow by 2.9 percentage points. Among them, the profits of leather shoes and textile and garment industries increased by 1.05 times and 47.0%, respectively, and the profit improved significantly. The profits of the alcoholic beverage, refined tea and food manufacturing industries increased by 10.3% and 8.4%, respectively, with growth rates of 8.4 and 2.9 percentage points higher. Pharmaceutical manufacturing profits narrowed by 22.0 percentage points.

However, affected by the fall in commodity prices, the performance of oil, coal, chemical and other industries is still poor. From January to May, the total profit of the oil, coal and other fuel processing industry fell by 92.8% year-on-year, 4.9 percentage points higher than that in January to April. The total profit of chemical raw materials and chemical products manufacturing industry decreased by 52.4% year-on-year, which was 4.9 percentage points narrower than the previous four months; Ferrous metal smelting and rolling industry profits fell 102.8 percent, 3.4 percentage points higher than the decline in January-April.

Wu Chaoming, vice president of the Caixin Research Institute, told interface news that the recovery of industrial profits is still slow, reflecting the difficulties of micro-enterprises at the management level. Looking back, the sustained recovery of industrial enterprise profits is still facing multiple difficulties, and the need for policy rescue has increased.

He further pointed out that on the one hand, it is expected that the producer price of industrial products (PPI) will bottom out around the middle of the year, but then it will continue to grow negatively, and price factors will continue to form a large drag on industrial profits. On the other hand, although the industrial production cycle tends to be smooth after the release of the epidemic is conducive to the reduction of enterprise costs, the intensity of the rescue policy to help enterprises has weakened compared with the epidemic period, and the upward pressure of enterprise costs is still prominent, which forms a certain constraint on the improvement of profits.

In addition to the above two factors, Wu Chaoming also said that due to the weakening of the marginal support role of the epidemic, the unstable expectations of business entities, and the lack of economic recovery momentum, the recent weakening pressure on domestic demand has increased, especially the two major drivers of real estate and consumption repair slope large probability marginal slowdown, which is also obviously not conducive to the repair of industrial profits.