Financial News Agency, November 28 (Reporter Guo Songqiao) According to data released yesterday by the National Bureau of Statistics, from January to October, industrial enterprises above the national scale achieved a total profit of 6115.42 billion yuan, down 7.8% from the previous year, and 1.2 percentage points narrower than in January-September. Among them, the profit of regulated industrial enterprises increased by 2.7% year-on-year in October, achieving positive growth for 3 consecutive months, and the efficiency of industrial enterprises continued to improve.

Yu Weining, a statistician from the Department of Industry of the National Bureau of Statistics, pointed out when interpreting the profit data of industrial enterprises, that in October, the effects of macroeconomic policies continued to show, industrial production grew steadily, the revenue of industrial enterprises rebounded at an accelerated pace, and profits continued to return to a positive trend.

Zheng Houcheng, chief macroeconomist at Yingda Securities, said that from January to October, the profit growth rate of regulated industrial enterprises in China was 1.2 percentage points higher than the previous value. Although it was in a negative range for 15 consecutive months, it continued to repair the trend during the year and hit a new high during the year.

It is worth noting that profits in all three categories of industry have rebounded, and profits in over 70% of industries have improved. From January to October, the year-on-year decline in mining and manufacturing profits narrowed by 0.2 and 1.6 percentage points from January to September, respectively. Profits in the electricity, heat, gas, and water production and supply industries increased by 40.0% year-on-year, and the growth rate accelerated by 1.3 percentage points. From January to October, out of 41 major industrial industries, the profit growth rate of 30 industries was faster or narrower than from January to September, changing from decline to increase, and profit rebounded by 73.2%.

Profits in the raw materials and consumer goods industries continued to improve. In January-October, the year-on-year decline in profit in the raw materials manufacturing industry was 4.8 percentage points narrower than in January-September. The decline in profit in the consumer goods manufacturing industry was 0.8 percentage points narrower than in January-September.

Yu Weining analyzed that with the continuous recovery of downstream demand, product prices in the raw materials industry have generally rebounded, revenue growth has accelerated, and profits have continued to improve. At the same time, benefiting from the effects of expanding domestic demand and promoting consumption policies, the consumer market is gradually picking up, and profits in the consumer goods industry continue to recover.

It is worth noting that the profits of different types of enterprises have also improved. In January-October, among regulated industrial enterprises, the year-on-year decline in profits of state-owned holdings, private, foreign investors, and Hong Kong, Macao, and Taiwanese investors was 1.6, 1.3, and 0.3 percentage points narrower than in January-September; the profit declines of large, medium, and small enterprises narrowed by 1.0, 1.2, and 1.9 percentage points, respectively.

Looking ahead to the trend of industrial enterprise profit data for November, Zheng Houcheng said that the total cumulative profit of industrial enterprises in November is likely to rise from October, but it is unlikely that it will be corrected during the year.

“Among the many factors affecting the total profit of industrial enterprises, the year-on-year price ratio, or PPI year over year, is the key factor, which directly determines whether the total profit of an industrial enterprise can be corrected year over year, because even if the number of products produced does not go up and the price falls in a negative range, then the overall cumulative year-on-year profit of an industrial enterprise is likely to be in a negative range. Even if the number of products produced increases, the absolute amount of loss will be greater.” Zheng Houcheng said.

Regarding the next phase, Minsheng Bank chief economist Wen Bin said, “It is expected that the decline in industrial companies' profits will continue to narrow, but the slope may slow slightly.” First, the decline in PPI is narrowing and the slope is slowing down, and international commodity prices are weakening. The increase in the base figure for the same period last year may affect the PPI recovery slope. Second, there have been repeated cases of enterprises replenishing inventories. Since August, enterprises have entered the stage of active inventory replenishment, but the recurrence in October will also affect industrial production performance. Furthermore, domestic real estate recovery is facing great uncertainty, and private enterprise investment confidence needs to be boosted, etc., all of which may limit the room for industrial enterprise profits to rise.