Combined profit in China's industrial sector gained a 9.8% year on year boost in October compared to the September's 7.7%. This rise, which equivalents to $89.1 billion, was attributed to the growth of sales revenue, rising producer prices and the strong profit in the raw materials sector.
According to the figures released by the National Bureau of Statistics, the main business revenue of companies with annual revenue of more than $2.9 million rose 5.4% last month. The producer price index, which measures factory gate prices and indicates a level of economic activity, rose 1.2% year on year on October.
Rising producer prices is a manifestation of the recovery of industrial product demand, making a significant contribution to the profit made in October.
"Although October industrial profit growth picked up, the structure of growth was not ideal," NBS official He Ping said in a statement accompanying the data.
"Profits in traditional raw material production increased relatively quickly...while high technology and equipment manufacturing profit growth slowed," the official added.
He furthered by saying that the profit growth was overly reliant on rising prices, and industrial firms need organic improvement to see better results.
There was a 310.2% rise in profits for iron and steel production. The producer price index is also expected to stay positive in the coming months.
The liabilities of Chinese industrial firms at the end of October were 5.1% higher than last year's figure on the same period.
The released statistics was seen as a positive sign for the country's economic restructuring and macroeconomic stabilization as it shows improvement in domestic demand for industrial products.
Jiang Chao, chief macroeconomics analyst at Haitong Securities, commented that "although industrial profit growth picked up in October, it is still lower than the level in July and August. The upstream industries, such as mining, saw improvement in profits, but the downstream sectors suffered."
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