China's industrial profits fall for second month in May on COVID-19 curbs

Profits at China's industrial firms shrank at a slower pace in May following a big slump in April, due to the resumption of activity in major manufacturing hubs, but COVID-19 curbs still weighed on factory production and squeezed factory margins.

Profits fell 6.5% from a year earlier, less than the 8.5% decline in April, according to data released by the National Bureau of Statistics (NBS) on Monday.

Despite relaxing COVID restrictions and gradual business resumption in major cities such as Shanghai last month, the weak property market and fears of any recurring waves of infections have cast a shadow over factory production and raised doubts over the flagging recovery in the world's second-largest economy.

Industrial firms' profits grew 1.0% year-on-year to 3.44 trillion yuan ($514 billion) in January-May, slowing from the 3.5% increase in the first four months, the NBS data showed.

Over the same five month period, revenue of industrial firms grew 9.1% to 53.16 trillion yuan, slowing from the 9.7% growth in the first four months. Profits at manufacturing firms shrank 10.8% in the first five months, extending the slide of 8.3% in the first four months.

China's economy showed signs of recovery in May after slumping the previous month, but consumption was still weak and underlined the challenge for policymakers amid the persistent drag from strict COVID-19 curbs.

Despite the uptick in overall industrial output, China's factory-gate inflation cooled to its slowest pace in 14 months in May, depressed by weak demand for steel, aluminium and other key industrial commodities.