TL;DR summary:
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Industrial profits fell 13.1% y/y in November, the steepest decline in over a year
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Weak domestic demand and factory-gate deflation outweighed export resilience
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Coal sector profits slumped sharply, dragging aggregate performance
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Autos and high-tech manufacturing remained relative bright spots
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Markets continue to expect further policy support in 2026 to stabilise growth
China’s industrial sector suffered its sharpest profit contraction in more than a year in November, underscoring the strain from weak domestic demand even as exports showed relative resilience. Official data released over the weekend showed profits at industrial firms fell 13.1% year-on-year,
- accelerating sharply from a 5.5% decline in October
- and marking the steepest drop in 14 months.
For the first eleven months of the year, industrial profits rose just 0.1%,
- slowing sharply from 1.9% growth recorded through October
- major drag from the coal mining and washing industry, where profits plunged more than 47%, reflecting falling prices and subdued domestic demand
Figures from the National Bureau of Statistics point to continued pressure on corporate margins from persistent factory-gate deflation and sluggish household consumption. The deterioration came despite better-than-expected export performance, highlighting an uneven recovery increasingly reliant on external demand rather than domestic momentum.
Sector performance was uneven. The automotive industry posted a 7.5% rise in profits, while high-tech manufacturing stood out with a 10.0% increase, signalling that policy-backed “new economy” segments continue to outperform traditional heavy industry.
In a statement accompanying the data, NBS chief statistician Yu Weining said the profitability recovery still requires stronger foundations amid global uncertainty and ongoing structural adjustment.
Analysts say the profit slump is consistent with broader cooling in activity late in the year:
- soft domestic demand remains the main drag
- there could be some improvement in profitability if firms scale back excessive investment under Beijing’s push against industrial “involution”
- the export sector may be some relief.
This article was written by Eamonn Sheridan at investinglive.com.
