Bad days are gathering over China’s manufacturing in May
Bad days are gathering over China’s manufacturing in May Industry Leaders Magazine

Major Chinese industrial companies have posted a rise in their combined profits in April aided by increased sales in the power generation, automotive and telecommunication sectors.

Net income rose to 437bn yuan ($71.3bn/£47bn) in April, a gain of 9.3% year-on-year, showed data from the National Bureau of Statistics (NBS). This compares with a 5.3% gain in March.

Chinese companies made a profit of 1.61tn yuan for the first four months of the year, a growth of 11.4%, while revenues rose 11.9% in the same period. This was down from 12.1% profit growth recorded in the first quarter.

According to the NBS statement, three major sectors such as electric and thermal power production, autos and computers, telecommunications and other electronic equipment have seen major growth in income.

Data also showed that private business were the growth drivers with their combined profits up 17.9% year-on-year in the first four months. This compares with 2.7% profits growth in the state-run companies.

Profits of companies in the electricity and heat production and supply industry rose 92.2%, while manufacturers of computers, telecommuications equipment and electronics were up 44.8%. However, profits in the petroleum and natural gas extraction businesses were down 7.9% year-on-year.

The NBS figures are compiled from data collected from industrial companies, which have annual revenue of over 20m yuan ($3.2m). Out of the 41 companies tracked, 30 posted profit growth, eight reported drop in income in the January- April period.

Earlier, a preliminary reading of a Purchasing Managers' Index by HSBC and Markit showed that manufacturing activity has contracted in May, a first in seven months. The index showed a reading of 49.6 in May compared to a final reading of 50.4 in April.

"The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds," Qu Hongbin, HSBC's economist in Hong Kong, said in a statement.