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China’s industrial profits rise, but stall on digital growth

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BEIJING, March 28 (Reuters) – Profit growth at China’s industrial firms accelerated in January-February, in line with other signs of momentum in the economy, though the outlook is clouded by outbreaks of COVID-19 and the was in Ukraine are fueling calls for monetary support measures.

Earnings rose 5.0% from a year earlier, before a 4.2% increase in December, the Office for National Statistics (NBS) said on Sunday.

Growth in January-February was fueled by rising gains in the energy and commodities sectors, thanks to higher prices for resources such as crude oil and coal.

Data for January and February are generally combined to smooth out distortions from the Lunar New Year holiday, which can fall in any month.

Monthly profit growth in distribution among other industrial companies has been weighed down by high raw material costs, which have languished in the single digits since November.

The slightly faster growth in industrial earnings coincides with improved NBS data on industrial production, retail sales and fixed asset investment in January-February, suggesting the impact of recent policy moves was starting. a feel

Still, challenges have emerged this year, including China’s most severe COVID outbreak since the start of the pandemic in 2020, fueled by the VARIANTS omicron, which threatens to disrupt local economies and further depress consumer spending.

“The gap between production and marketing profit margins widened as distribution profit margins fell further,” Goldman Sachs analysts wrote in a note.

“We expect the COVID outbreak in several provinces to affect industrial profits in the short term,” he said.

Given the coronavirus outbreaks, measures to further ease monetary and fiscal measures can be expected, they said.

The Shanghai financial hub has been battling its worst wave of COVID in the past month since the initial outbreak in China two years ago.

($1 = 6.3658 Chinese yuan)

(Reporting by Ryan Woo, Ellen Zhang, and Huiling Zhou. Editing in Spanish by Marion Giraldo)

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