China Industrial Profit Growth Slows as Factory Inflation Eases

(Bloomberg) -- Profit growth at Chinese industrial firms slowed in November as producer prices rebound appeared to soften.

Industrial profits rose 14.9 percent last month from a year earlier, compared with previously reported 25.1 percent in October, the statistics bureau said on Wednesday.

Robust demand and consistent factory inflation have lifted profitability this year. That helps manufacturers pay off their debt and invest more as real corporate borrowing costs decline. Still, as factory-gate prices softens, profit growth may also be due to slow.

"Official year-over-year industrial profits growth is set to revert lower, but growth in reality should also trend down as we think the increase in PPI inflation has peaked," economists at Pantheon Macroeconomics Ltd. wrote in a recent report.

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