Global Economic Collapse: Chinese factory profits plunge 10% (5+5). This is the third (3) monthly decline in factory profits in a row, and much worse than the 5% (5) decline seen in September. Worst decline in a single month in at least eight years. China’s growth hit a near – 30 (6×5) year low in the July-September quarter.
As the trade war between Beijing and Washington drags on, Chinese factories are being hit hard — fuelling concerns that the world’s second-largest economy is losing momentum.
Profits at China’s industrial firms tumbled by almost 10% year-on-year in October, new government data show today. That’s the worst slump in eight months, suggesting the tariffs imposed on Chinese imports by the US are hurting.
This is the third (3) monthly decline in factory profits in a row, and much worse than the 5% (5) decline seen in September.
It appears to be the worst decline in a single month in at least eight years! However, there was a 15% (5+5+5) slump in January-February (when the Lunar New Year distorts the data). Either way, it’s a bad sign.
So far this year, profits across China’s massive factory sector are down 3% (3), with manufacturing profits slumping by almost 5% (5). That will worry Beijing, and could force policymakers to consider new stimulus measures.
Zhu Hong, a senior statistician at China’s National Bureau of Statistics said the decline in profits was mainly due to “a bigger decline in the output price of industrial products, slowing growth of production and sales and other factors.”
We already know that China’s growth hit a near-30 (6×5) year low in the July-September quarter, and this implies that the fourth quarter of 2019 is tough too.
Nie Wen, economist at Shanghai-based Hwabao Trust, fears that Chinese industrial firms will keep struggling, saying (via Reuters):
“The big drop in October profits suggests the real economy is still facing plenty of difficulties.
Profit growth is expected to stay negative for a period of time in the future, likely prompting authorities to unveil more growth-boosting measures in a gradual and restrained way.”
Such weak data also puts more pressure on president Xi Jinping to agree a trade deal with America. That, though, would require big concessions on issues such as intellectual property protections and curbing state subsidies of Chinese firms.
The US stock market hit another record high last night, as investors cling to hopes that a deal will be reached soon.
We’ll find out later today if America’s economy is suffering any ill-effects from the trade dispute, when the latest personal income and home sales data is released, along with updated Q3 growth figures.
Categories: Economic Collapse