PROFITS at China’s industrial firms fell at a slower pace in April, helped by improvements in automobiles and electronics, but the economy still faces pressure as activity and demand remains weak after the coronavirus outbreak.

Earnings fell 4.3 percent year on year to 478.1 billion yuan (US$67 billion) last month, after plunging 34.9 percent in March, the statistics bureau said yesterday.

China’s economy has shown signs of recovery as it reopens after several weeks of tough virus containment measures.

But fallout from the pandemic is expected to crunch earnings for more months as demand at home and abroad remains weak.

For the first four months, industrial firms’ profits fell 27.4 percent year on year to 1.26 trillion yuan, compared with a 36.7 percent slump in the first three months.

Automobiles, special-purpose equipment, electrical machinery and electronics industries notched up significant recoveries in profits in April. Twenty-three out of 41 sectors surveyed posted growth last month versus eight in March.

However, the overall profit outlook is still not optimistic as demand has still not recovered, industrial goods prices remain low, and pressure from costs are still high, Zhu Hong, an official at the statistics bureau, said in a statement.

Recent data from factory activity to trade have underscored a weak outlook for China and the global economy.

Earnings at China’s State-owned industrial firms were down 46 percent year on year for the first four months, slightly faster than a 45.5 percent decline in the quarter ending March, the data showed.

Downward pressure on prices continues to hurt profits, particularly in the commodity and heavy industry sectors dominated by State-owned enterprises (SOEs), said Louis Kuijs of Oxford Economics.

“Given our subdued outlook for commodity prices, we expect the profitability of SOEs and heavy industry to continue to struggle in the coming months,” he said.

Private sector profits declined sharply although at a slower pace of 17.2 percent in the January-April period, from the January-March period’s 29.5 percent fall.

“The continued contraction in industrial profits could weigh on manufacturing investment, employment and fiscal revenues, and we expect the government to step up policy stimulus measures to cope with the COVID-19 shock,” said Nomura analysts in a note.

(SD-Agencies)