China's industrial profit growth slows in June on high raw material prices

Reuters reports that data from the National Bureau of Statistics showed that profit growth at China's industrial firms slowed for the fourth straight month in June, as high raw material prices weighed on factories' margins.

Industrial firms' profits rose 20% year-on-year in June to 791.8 billion yuan ($122.27 billion), after a 36.4% increase in May.

The Chinese economy has largely recovered from disruptions caused by the coronavirus pandemic, but it has faced new challenges in recent months such as higher raw material costs and global supply chain crunches.

In the first half of 2021, industrial firms' profits grew a hefty 66.9% from a pandemic-induced slump in the same period a year earlier. Profits in January-June increased 45.5% from the same period in 2019, before the global pandemic started.

"The profit margin of upstream industrial enterprises improved further while downstream profit margin edged down slightly," said analysts from Goldman Sachs in a note.

China's factory activity slowed in June on a resurgence of COVID-19 cases in the export province of Guangdong, with epidemic prevention and control efforts curbing port processing capacity.

Metals processing, as well as chemicals and pharmaceuticals industries, drove profit growth in June, according to NBS data.