Profits of industrial enterprises above designated size fell 16.8% year on year in the first half of the year, the cumulative profit decline narrowed month by month, and profits of industrial enterprises steadily recovered, according to data released by the National Bureau of Statistics on the 27th.

In the first half of the year, manufacturing earnings improved significantly. According to the data, among the 41 industrial categories, the profit growth rate of 30 industries accelerated from the first quarter, or the decline narrowed, from a decline to an increase, accounting for more than 70%. The decline in manufacturing profits led to the decline in industrial profits above designated size narrowing by 7.4 percentage points from the first quarter.

Zhou Maohua, macro researcher of financial Marketing Department of Everbright Bank, analyzed that the overall operation situation of domestic industrial sectors in the first half of the year maintained an improving trend, and the profit structure of upstream and downstream continued to improve. This is mainly due to the continued recovery of demand, macro-rescue and assistance policy support, the gradual easing of comprehensive operating cost pressure in manufacturing and other industries, coupled with the rapid growth of profits in high-tech industries, equipment manufacturing and new energy industries.

“Since the beginning of this year, the high-end equipment manufacturing industry has been cultivated and strengthened, and the development momentum of green and low-carbon industries has been strong. In the first half of the year, the profit of the equipment manufacturing industry increased by 3.1% year-on-year, which changed from a decline to an increase.” Sun Xiao, statistician of the Industrial Department of the National Bureau of Statistics, said that the profit of the equipment manufacturing industry accounted for 34.3% of the proportion of industries above designated size, which was 6.8 and 6.7 percentage points higher than the first quarter and the same period of last year.

In terms of specific industries, the profits of electrical machinery, automobile, railway, shipping, aerospace and transportation equipment industries increased by 29.1%, 10.1% and 35.3% respectively; The general equipment industry was driven by the development of the industrial chain, and its profit increased by 17.9%.

The gradual release of market demand led to the improvement of profits in most consumer goods manufacturing industries. In the first half of the year, among the 13 major consumer goods manufacturing industries, the profit decline of 10 industries narrowed or increased from the first quarter, accounting for 76.9%.

Electric water industry profits continue to grow. In the first half of the year, the profits of the electricity, heat, gas and water production and supply industry increased by 34.1% year-on-year, and continued to grow rapidly. Among them, the power industry is driven by the continuous recovery of the national economy, the guaranteed supply of electricity to meet the peak summer, the rapid development of renewable energy power generation and other factors, the power generation continues to grow, and the industry profit increased by 46.5% year-on-year.

The data show that the profits of different types of enterprises have improved, and small, private and foreign-funded enterprises have improved significantly. In the first half of the year, among industrial enterprises above designated size, the profit decline of large, medium and small enterprises narrowed by 4.1, 4.9 and 5.6 percentage points compared with the first quarter, respectively, of which the profit of small enterprises in June changed from a decline to an increase. The profit declines of private, foreign and Hong Kong, Macao and Taiwan enterprises narrowed by 9.5 and 12.1 percentage points respectively from the first quarter.

From a single month growth point of view, in June, the profits of industrial enterprises above designated size fell by 8.3% year-on-year, the decline was 4.3 percentage points narrower than in May.

“The recovery of profits of industrial enterprises is further consolidated, and the pressure on production and operation of enterprises has been further eased.” This is corroborated with the macro-data in June showing that the industrial production boom has risen more than expected and has been improving month-on-month.” Said Pang Ming, chief China economist at Jones Lang Lasalle.

In June, the cost per 100 yuan of operating income of industrial enterprises above designated size decreased by 0.83 yuan compared with May. Operating income margin was 6.44%, 0.27 percentage points higher than in May. This reflects an improvement in unit cost margins and a pick-up in profit margins from the previous quarter.

“As upstream mineral prices continue to decline, the pressure on raw material costs of industrial enterprises has eased, boosting the improvement of enterprise unit cost margins.” Sun Xiao said.

Sun Xiao stressed that overall, the profits of industrial enterprises continued to recover. In the next stage, we must implement macro policies in a scientific and precise manner, strive to expand effective demand, improve the level of integration between production and marketing, stimulate the vitality of business entities, cultivate and strengthen new drivers of development, and promote high-quality development of the industrial economy.

“In the past two years, China’s macro economy is in the active destocking stage, the total profit of industrial enterprises has accumulated negative growth year-on-year, in this context, the economic probability next year is in the passive destocking and active restocking stage, it is expected that the year-on-year growth rate of industrial enterprises is expected to turn positive next year.” Said Zheng Houcheng, chief macroeconomist at Yingda Securities.