CHINA’S INDUSTRIAL PROFITS CLIMB, SHOWING MANUFACTURING STRENGTH

(Bloomberg) -- Profits at Chinese industrial firms grew at a faster pace in June, showing the resilience of the manufacturing sector which has helped cushion an economic slowdown.

Profits rose 3.6% in June from a year earlier, according to data released by the National Bureau of Statistics on Saturday. That compared with a year-on-year rise of 0.7% the month before. For the first half of the year, it climbed 3.5% to 3.5 trillion yuan ($484 billion).

The increase shows the strength of the industrial side of the economy as a growth driver this year, with a 6% expansion in the first half helping to compensate for weak consumer spending. While profits are recovering from a weak performance last year, they still aren’t back to levels seen in 2022 or the record set in 2021.

“Insufficiency of domestic effective demand hinders the continuous improvement of companies’ efficiency and the severe and complex international environment increases the pressure on enterprise operation,” Yu Weining, a statistician at the statistics bureau, said in a separate statement. “The foundation for industrial profitability recovery still needs to be consolidated.”

The People’s Bank of China surprised with rate cuts this week in a sign of greater support for the economy. It first lowered a key short-term rate on Monday, a step toward making that the future benchmark policy rate.

The central bank then cut the one-year rate on Thursday in an unscheduled operation, suggesting authorities are stepping up monetary stimulus.