Although the main macro indicators in July were not good, the profits of industrial enterprises continued to improve at the micro level.
According to data released by the National Bureau of Statistics on the 27th, from January to July, the profits of industrial enterprises above designated size increased by 6.9% year-on-year, and the growth rate was 0.7 percentage points higher than that from January to June. Among them, the profit in July increased by 11% year-on-year, and the growth rate was 5.9 percentage points faster than that in June, which was the second highest point this year.
Li Huiyong, chief macro analyst at Shenwan Hongyuan Securities, told a reporter from the Shanghai Securities News that the continued improvement in industrial corporate profits in July was mainly due to the improvement in revenue, the expansion of cost reductions, the narrowing of PPI declines and the low base effect.
It is worth noting that, by industry, the profits of several major industries that promote capacity reduction, such as steel, coal, and non-ferrous metals, have improved significantly.
According to data, in July, the ex-factory price of ferrous metal smelting and rolling processing industry increased by 2% year-on-year, while in June it fell by 1.3% year-on-year. The industry profit changed from a loss of 1.39 billion yuan in the same period last year to a profit of 14.83 billion yuan; in July, non-ferrous metals The ex-factory price of smelting and rolling processing industry fell by 2% year-on-year, and the decline was significantly narrower than June by 4.1 percentage points. The industry profit increased by 6 billion yuan year-on-year, compared with a year-on-year increase of 3.55 billion yuan in June.
According to statistics, the above two industries together drove the profit growth of industrial enterprises above designated size by 2.8 percentage points in the month, and contributed 47.5% to the acceleration of profit growth of industrial enterprises above designated size.
In addition, although the profit of the mining industry still fell by 77% from January to July, the decline narrowed by 6.6 percentage points from January to June.
He Ping, Department of Industry, National Bureau of Statistics, analyzed: “Affected by changes in the international market and structural reforms on the domestic supply side, the prices of steel and non-ferrous metals have rebounded recently. Coupled with the obvious low profits in the same period last year, the profits of the steel and non-ferrous industries have clearly improved. “And another data also confirms the steady progress of capacity reduction. At the end of July, the total assets of the ferrous metal smelting and rolling processing industry fell by 2.3% year-on-year, and the decline was 0.6 percentage points larger than at the end of June, continuing the downward trend this year.
The market generally believes that the effect of capacity reduction will continue to ferment in the future, which will drive the profits of industrial enterprises to continue to stabilize and improve.
Ren Zeping, chief economist of Founder Securities, said that high-frequency data in August showed that steel and coal prices continued to rebound, and the State Council will supervise the progress of steel and coal reduction in capacity in the second half of the year, which will help improve the relationship between supply and demand. In addition, the PPI is expected to turn positive at the end of this year, which is conducive to the year-on-year improvement in profits of industrial enterprises.
Li Huiyong also holds the same view. For example, he said, from the perspective of coal consumption for power generation, blast furnace operating rate and automobile semi-steel tire operating rate, the year-on-year data in August was significantly higher than the same period in July. In addition, the prices of the means of production have also improved significantly compared with the same period in July, confirming from another level that industrial production in August was not weak.
However, the Bureau of Statistics emphasized that although the profit growth of industrial enterprises is accelerating, the overall market demand has not improved significantly. At the same time, problems such as the long payback period for accounts receivable, high growth in management expenses, and overcapacity still test the recovery of economic benefits in the industrial sector.
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