China’s industrial profits rebounded sharply in December, beating expectations and offering early signs of easing deflationary pressure.
Summary:
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China industrial profits rose 5.3% y/y in December
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Growth beat expectations for a sharp decline
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Producer price deflation eased to a one-year low
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December rebound snapped a two-month contraction
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Full-year profits rose for first time since 2021
China’s industrial profits returned to growth in December, snapping a two-month contraction and coming in well above market expectations, according to official data released on Tuesday.
Figures from the National Bureau of Statistics showed industrial profits rose 5.3% year-on-year in December, sharply outperforming expectations for an 11% decline. The rebound was supported by easing price pressures, with producer prices recording their smallest annual fall in more than a year.
The improvement suggests margins across parts of the industrial sector may be stabilising after prolonged deflationary pressure, offering tentative signs that policy support and improving demand conditions are gaining traction late in the year.
For 2025 as a whole, industrial profits increased 0.6%, marking the first annual rise since 2021 and ending a multi-year period of earnings contraction. While the pace of growth remains modest, the return to positive territory is likely to be welcomed by policymakers seeking to reinforce confidence in the industrial sector.
However, analysts caution that the sustainability of the rebound will depend on further progress in demand recovery and a continued easing in producer price deflation, which has weighed heavily on corporate profitability in recent years.
This article was written by Eamonn Sheridan at investinglive.com.