The profit decline of industrial enterprises above designated size narrowed significantly in October, and high-tech manufacturing played an important supporting role
2024-11-28
The National Bureau of Statistics released the profit data of industrial enterprises above designated size in China from January to October 2024 on the 27th. From January to October, industrial enterprises above designated size in China achieved a total profit of 58680.4 billion yuan, a year-on-year decrease of 4.3%. In October, with the coordinated efforts and sustained effectiveness of stock policies and a package of incremental policies, the production of industrial enterprises above designated size grew steadily, and the decline in enterprise profits for the month significantly narrowed Yu Weining, a statistician from the Industrial Department of the National Bureau of Statistics, explained. In October, the profits of industrial enterprises above designated size decreased by 10.0% year-on-year, a significant decrease of 17.1 percentage points compared to September. Regarding the improvement in profit growth rate in October, Chen Xing, Chief Macro Analyst at Caitong Securities, analyzed that on the one hand, benefiting from the synergistic effect of a package of incremental policies, coupled with the month on month increase in cost and expense growth in unit revenue, the revenue profit margin for this month has increased seasonally compared to the previous month. On the other hand, the revenue and profit margin weakened in the same period last year, with a low base supporting the growth rate of this month's revenue and profit margin. Looking at different industries, over 60% of them have seen an improvement in profitability compared to the previous month, with the manufacturing industry showing the most significant improvement. In October, among 41 major industrial sectors, 27 industries saw an increase in year-on-year profit growth compared to September, or a narrowing of the decline or a shift from decline to increase, accounting for over 60%. Among the three major categories, the manufacturing industry has a significant effect on improving the profits of industrial enterprises. The decline in manufacturing profits in October narrowed significantly by 22.3 percentage points compared to September, and the decline in profits of large-scale industries narrowed by 17.8 percentage points compared to September. In the manufacturing industry, the profit growth rate of the midstream equipment manufacturing industry has improved Wen Bin, Chief Economist of Minsheng Bank, stated in an interview with China Net Finance reporters. The equipment manufacturing industry grew by 4.5% year-on-year in October, achieving a return to positive growth rate. Among them, the profits of industries such as railway, shipbuilding, aerospace, electronics, and specialized equipment increased in the current month. With the advancement of high-end, intelligent, and green manufacturing processes, high-tech manufacturing plays an important supporting role Wen Bin said that in October, the profits of high-tech manufacturing industry increased by 12.9% year-on-year, driving a 1.9 percentage point increase in profits of large-scale industries. Among them, industries such as wearable smart device manufacturing, sensitive component and sensor manufacturing, industrial control computer and system manufacturing, and lithium-ion battery manufacturing have seen rapid profit growth. The profits of raw material manufacturing and consumer goods manufacturing have improved. In October, the profit decline of the raw material manufacturing industry narrowed by 27.7 percentage points compared to September. In the view of Liang Zhonghua, Chief Macro Analyst at Haitong Securities, this is mainly due to the implementation of domestic stable growth policies, the recovery of demand in infrastructure, real estate and other related fields, the rebound of black series prices, and the decline in upstream raw material prices such as coal, which has greatly improved profit margins. Among them, the steel industry has turned losses into profits for the first time this year, with a year-on-year increase of 80.1% in profits in October. The year-on-year decline in consumer goods manufacturing profits in October narrowed by 20.4 percentage points compared to September. Driven by the implementation of policies to expand domestic demand and promote consumption in various regions, the continued growth of exports, and the recovery of domestic demand, industries such as textiles and clothing, chemical fibers, cultural, educational, industrial, and aesthetic industries have seen rapid profit growth. In terms of inventory, the nominal growth rate of finished goods inventory in industrial enterprises at the end of October was 3.9%, a decrease of 0.7 percentage points from the end of September. Based on the narrowing of the decline in industrial enterprise profits and the slowdown in the growth rate of finished goods inventory in October, Wen Bin believes that the signs of passive destocking in enterprises reflect the strong driving force of incremental policies and the sustained effectiveness of stock policies. The marginal improvement of domestic demand, coupled with the rebound of production and sales linkage, has led to passive destocking, but the sustainability still needs to be observed. Zhang Di, the head of the macro team at Galaxy Securities, pointed out that from the PMI data, companies have shown certain characteristics of "actively replenishing inventory". However, due to the overall weak effective demand, there is still significant inventory pressure in non policy supported areas, and the inventory cycle is still not significant. From the perspective of segmented industries, some midstream manufacturing and downstream consumer goods industries are in the process of replenishing inventory Chen Xing analyzed that "industries such as black smelting, alcoholic beverages, and chemicals are still experiencing active destocking, and more than half of the industry's inventory was destocked in September." Chen Xing pointed out that the recent policy of stabilizing growth continues to be effective, coupled with the central government's intensified stimulus measures, and domestic demand is expected to stabilize and rebound. High frequency data shows that there has been a significant improvement in real estate and passenger car sales in recent times. With the reversal of market expectations and the rebound of confidence, there is still hope for companies to accelerate their inventory replenishment. Looking ahead, Wen Bin expects that the profits of industrial enterprises are expected to continue to improve. On the one hand, a package of macroeconomic stimulus policies is showing results and will help industrial enterprises recover profits. On the other hand, the uncertainty of external demand and weak domestic demand will still constrain the profit growth of industrial enterprises. Wen Bin pointed out that the current policy shift towards equal emphasis on investment and consumption, promoting real estate demand, reducing residents' repayment pressure, and boosting residents' consumption, can all help improve demand, alleviate supply-demand imbalance, and may promote the recovery of industrial enterprise profits. On October 10th, the Ministry of Justice and the National Development and Reform Commission released the draft of the "Law of the People's Republic of China on the Promotion of the Private Economy", which involves safeguarding fair competition, improving the investment and financing environment, supporting scientific and technological innovation, and may play a positive role in boosting the confidence of industrial enterprises and consolidating the foundation of industrial economic recovery. Zhang Di believes that the current policies are still increasing their impact on demand, while fiscal policies are also being strengthened. It is expected that with a large amount of funds gradually forming physical workloads and the introduction of incremental policies in the future, it will effectively drive the further increase of fiscal expenditure, thereby increasing the demand for industrial products and restarting the economic cycle of "investment consumption reinvestment". With the recovery of the demand side, the industrial economy will also break away from the trend of 'involution', prices are expected to rebound, the painful period of the transition between new and old driving forces will become more stable, and corporate profits and labor demand will also rise accordingly Zhang Di said. (New Society)
Edit：Yao jue Responsible editor：Xie Tunan
Source：China.org.cn
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