China’s Industrial Profits Post Steep Decline in October, Trade War Weighs
Industrial profits in China slipped lower for the third straight month during October as a result of weakening exports and producer prices. According to data released by the NBS, industrial profits contracted by 9.9% YoY in October to touch 427.56 billion yuan.
This was the largest decline in industrial profits seen since February this year and more severe than the 5.3% decline seen during the previous month. Falling domestic as well as overseas demand in the wake of the trade war has kept industrial profits under pressure over recent months.
The NBS data also reveals that industrial profits declined by 2.9% YoY for the period of January-October 2019. In addition, China’s PPI had also declined in October at the fastest pace since July 2016 over the weakening demand.
Even though trade talks are progressing well according to official statements put out by both teams, there is still a high level of uncertainty on when the phase one trade deal would be ready for signing. The interim trade deal will help boost the sentiment considerably as the threat of tariff hikes would begin to fade once a trade deal is signed.
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