Industrial profits rise most in 3 years as economy shows stability

Profits in China’s industrial sector rose at the fastest pace in three years last month as the economy showed more signs of stabilizing, though some private forecasters said the improvement may be temporary.

Profits of industrial companies in August jumped 19.5 percent from a year earlier to 534.8 billion yuan ($ 80 billion), the National Bureau of Statistics ( NBS) said on Tuesday. That was the largest increase since August 2013.

China’s economy grew 6.9 percent last year, the slowest in 25 years, as global demand ebbed. Following billions of dollars in government spending and a property boom in the country’s top- tier cities, official data in recent months are starting to point to some stabilization in the economy.

Steel and oil refining helped drive the jump in profits last month, the NBS said, in line with the view that State infrastructure projects and a rise in construction are lifting the basic materials sectors and the overall economy.

In August, the volume of rail freight rose for the first time since December 2013, expanding 1 percent from a year earlier, said data released by the NBS on Tuesday.

“Gross domestic product growth in the third quarter could be faster than the first or second, in the range of 6.7 percent to 6.8 percent,” said Liao Qun, chief economist at Citic Bank International.

The Asian Development Bank on Tuesday raised its growth forecast this year for China to 6.6 percent from its last estimate of 6.5 percent, citing fiscal and monetary stimulus measures.

But some economists are more cautious, saying the growth drivers are not sustainable on their own in the longer run. The NBS also said the jump in profits was partly due to a low base of comparison the previous year.