China: Moderation in industrial profit growth resumes in March – Nomura

China’s industrial profit growth resumed its moderation in March, falling by 4.5 percentage points (pp) to 11.6% y-o-y ytd, notes the analysis team at Nomura.

Key Quotes

“In year-on-year terms, industrial profit growth slowed markedly to 3.1% after double-digit growth through 2017 and in January-February this year.”

“The worsening of profit growth was broadly based, but led by state-owned enterprises, for which profit growth fell by 6.5pp to 23.1% y-o-y ytd, and by joint-stock enterprises, for which profit growth declined by 4.8pp to 16.2%.”

“We see the moderation in producer price index (PPI) inflation as one reason for the slowing of profit growth in March.”

“”We expect the downward pressure on industrial profit growth to continue.”