Chinese industrial profits surged 17.9% year-over-year in June, compared with an 8.9% rise in May.
Of course, one should note that this came on the back of a lower base last year, when industrial profits were up 5% in June 2013. This however shows that China’s mini-stimulus has helped stimulate the economy.
In Q2 profits were up 12.5% YoY, from 10.1% in Q1. For the first six months of the year, total profits were up 11.4% YoY at 2.86 trillion yuan.
The good news is that private businesses are still leading profit growth. Year-to-date they saw profits up 13.5% YoY in June, while state owned enterprises (SOEs) saw Ytd profits up 5.6%.
“Downstream industries generally saw an improvement in profit growth at a faster pace than in May,” writes Sylvia Sheng at Bank of America. “In particular, chemical materials, computer and telecommunications, general and special equipment saw a significant increase in profit growth in June.”
Coal mining however continues to see profits slump. In June, coal mining profits were down 44% YoY, compared with a 55% contraction the previous month driven largely by the slump in coal prices.
The Shanghai Composite surged 2.4% on Monday.
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