China's industrial profit growth slows for sixth month

Reuters reports that data from China's statistics bureau showed that profits at China's industrial firms grew at a weaker pace in August from a year earlier, slowing for a sixth consecutive month, as manufacturers struggled with high commodity prices, COVID-19 outbreaks and shortages of some key components.

Profits rose 10.1% on year to 680.3 billion yuan ($105 billion) last month compared with a 16.4% gain in July.

Momentum in the world's second-biggest economy has weakened in recent months, with its vast manufacturing sector buffeted by gathering headwinds.

High commodity prices in recent months have hurt the bottom-lines of many medium-sized and downstream factories. China last week vowed to step up policy coordination to counter challenges from high commodity prices.

To cool prices, China will auction more industrial metals from its state stockpiles next month in a rare release of inventories. Prior to this year, Beijing had not sold off state metal reserves for more than a decade.

Earlier this month, China also released crude oil from its strategic reserves for the first time.

But further dimming the outlook for manufacturers, China has tightened controls on power usage by energy-intensive firms to meet climate goals, hurting production. The power shortages have also triggered electricity cuts across regions this month, clouding the economic outlook

For the January-August period, industrial firms' profits rose 49.5% year-on-year to 5.61 trillion yuan, slowing from a 57.3% increase in the first seven months of 2021. Liabilities at industrial firms rose 8.4% on an annual basis at end-August, up from 8.2% growth as of end-July.