In a welcome development, at least compared to recent dire readings, Chinese industrial profits for large firms slipped fractionally in the 12 months to September, declining 0.1% according to data released by the National Bureau of Statistics (NBS) earlier today.
The reading was far stronger than the 8.8% annual decline registered in the year to August, the largest recorded in the four-year history of the survey.
Between January to September, profits declined by 1.7% compared to the same period a year earlier. This was a slight improvement on the 1.9% annual contraction recorded between January to August.
While an improvement on the contraction recorded in August, the NBS remain pessimistic towards the profit outlook for industrial firms.
“Even though the rate of industrial losses narrowed in September, given that downward pressure on the industrial economy continues, the industrial profit outlook is still not optimistic,” said the NBS in statement posted on its website.
According to Reuters, the NBS said that the milder reading was thanks to a recovery from sharp losses due to currency fluctuations, which
it blamed for the August plunge.
In August the People’s Bank of China announced a change to the daily rate setting mechanism for the Chinese renminbi, allowing market forces to play a greater role in determining it trading level. The surprise announcement saw the renminbi initially weaken by close to 4% against the US dollar, although it has since trimmed that decline to around 2%.