China's industrial profits fall by 10% in October as deflation worries linger

China's industrial profits dropped by 10% in October from a year ago, in another sign that Beijing's stimulus measures have yet to reverse a slump in corporate earnings.

That marked the third straight month of the profits decline, following a 27.1% year-on-year plunge in September, the steepest decrease since March 2020. Industrial profits are a key gauge of the financial health of factories, mines and utilities in China.

In the first ten months, profits at China's industrial firms decreased by 4.3% from a year ago, the National Bureau of Statistics said in a statement Wednesday. That was compared with a fall of 3.5% in the period through September.

The statistics bureau attributed the smaller decline in October to the implementation of Beijing's stimulus measures. "Most industries showed improved profitability from the previous month, particularly helped by the equipment and high-tech manufacturing sector," NBS statistician Yu Weining said.

"The deceleration in the decline of industrial profits reflects a gradual stabilizing of Chinese economic conditions, albeit at a low base," said Eugene Hsiao, head of China equity strategy at Macquarie Capital, adding that the trend coincided with "a degree of one-off demand" as local exporters rushed out shipments to the U.S. ahead of expected higher tariffs.

He expects further fiscal support from Beijing next year to have a more meaningful impact on lifting corporate earnings.

State-owned firms recorded a 8.2% decline in profits in the January to October period, while private enterprises saw profits drop by 1.3%.

Foreign industrial firms, which include those with investments from Hong Kong, Macao and Taiwan, saw profits climb marginally by 0.9% in the first ten months, from a year ago.

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