BEIJING (Reuters) - China’s industrial firms suffered a rare annual drop in profits in the first two months of 2012 mainly in petrochemicals, metals and auto companies, the latest signs of weakening momentum in the world’s No. 2 economy.
Profits fell 5.2 percent so far in 2012, according to the industrial profitability indicator, published by the National Bureau of Statistics (NBS) every month.
The indicator of year-to-date profits covers industrial firms with annual revenue above 20 million yuan and showed a downward trend of industrial profitability in China.
The last period that China reported nationwide industrial profit fall was in the first eight months of 2009.
Industrial profits in 2011 jumped 25.4 percent to 5.45 trillion yuan ($863.86 billion), or 454.5 billion yuan a month in average, but in the first two months of 2012, combined profits of Chinese industrial firms were only 606 billion yuan, or 303 billion yuan a month.
The NBS did not give any reasons for the trend.
Profits in the chemical industry fell 28.8 percent, those in ferrous metal processing plunged 94 percent, while automobile manufacturing profits were down 6.5 percent.
Enterprises in the sectors of petrochemical, coking and nuclear fuel processing made losses in the first two months of 2012, compared with a profit in 2011, the agency said.
Energy exploration firms fared better, with profits increasing 15.5 percent in the first two months; followed by food processing of 13.3 percent as well as power and heating supply of 21.1 percent, the agency said.
China’s economy is facing stiff headwinds as exports slackened while there are increased signs of softening domestic demand as Beijing keeps up its property tightening measures.
The HSBC flash purchasing managers index, the earliest indicator of China’s industrial sector, showed that factory activity shrank for a fifth straight month in March, leaving investors fretting about the risks to global growth and anticipating fresh policy support from Beijing.
($1 = 6.3140 Chinese yuan)
Reporting by Zhou Xin and Kevin Yao; Editing by Ramya Venugopal