China’s industrial sector had a difficult September, with profits plunging by 27.1% compared to the same month in 2023. The drop marks the worst monthly decline so far this year, deepening the ongoing strain on businesses. In August, profits fell by 17.8%.
A report from the National Bureau of Statistics (NBS) points to weak demand and falling producer prices as key factors. In September, consumer prices rose by 0.4%. Meanwhile, producer prices dropped by 2.8%, highlighting persistent deflation pressures that continue to weigh on manufacturing.
High-tech performing well
On a more positive note, high-tech industries seem to be holding steady. Profits in this sector rose by 6.3% in the first nine months of 2024. This growth reflects China’s focus on boosting advanced industries, such as clean energy and artificial intelligence, even as other areas struggle.
China’s economy has expanded by 4.8% in the first nine months, just under 5% target
Economic growth overall is slightly below target. China’s GDP expanded by 4.6% in the third quarter and by 4.8% in the first nine months. Beijing’s goal of around 5% growth remains within reach, but it’s clear that more support might be needed.
PMI for October out later this week
An important release to watch is the manufacturing Purchasing Managers’ Index (PMI) for October, due out on Thursday. Economists polled by Reuters expect it to come in at 50.1. A reading above 50 would indicate growth, while below 50 signals contraction. In September, the PMI was 49.8, indicating a slight contraction in manufacturing activity.
Upcoming fiscal stimulus announcement is expected soon
Economists and analysts are also keeping an eye on the upcoming National People’s Congress Standing Committee meeting, which is scheduled from November 4-8. It’s anticipated that new policies or fiscal measures will be announced to help stabilize the economy. A fiscal stimulus announcement could play a key role in shaping China’s economic outlook for the rest of the year.
