The accelerated profit growth of upstream industries, the partial transfer of costs by middle and downstream industries and the decline of costs push up the profits of industrial enterprises. From January to October, the profits of Industrial Enterprises above designated size increased by 42.2% year-on-year, and the two-year compound growth rate was 19.7%. The two-year average growth rate was 0.9 percentage points higher than that from January to September. However, in terms of the growth rate of the month, the profit in October increased by 24.6% year-on-year, 8.3 percentage points higher than that of the previous month, and the two-year compound growth rate was 13.2 percentage points higher than that of September to 26.4%. There are three main reasons for the high profit growth of industrial enterprises in October: first, the profits of upstream industries continued to maintain high growth. From January to October, the profits of mining and raw material manufacturing increased by 2.81 times and 56.1% respectively year-on-year, with the growth rate accelerating by 51.7 and 18.4 percentage points respectively compared with the previous month; Second, the costs of some industries were transferred to the terminal, and China's consumer prices and export prices increased: in October, the price increase of industrial consumer goods expanded by 1 percentage point to 3.8%, and the general export price index increased by 20.3% year-on-year, 9.7 percentage points higher than that in September. The third is the decline of costs. The costs and expenses per 100 yuan of operating revenue decreased by 0.03 yuan and 0.02 yuan to 83.7 yuan and 8.39 yuan respectively compared with the previous month.
The restoration of profits of both state-owned and private industrial enterprises was accelerated. From January to October, the profits of private industrial enterprises increased by 30.5% year-on-year, down 0.2 percentage points from the previous month; The two-year compound growth rate of profits of private industrial enterprises ended the previous slowdown trend, mainly due to the support of high export growth and the partial transfer of high costs to the terminal. Although the low base effect is weakened, the upstream and raw material related industries are dominated by state-owned and state-controlled industrial enterprises. Therefore, the profits of state-owned industrial enterprises still maintain a high growth trend, with a year-on-year growth rate of 74.2%. In terms of two-year compound growth rate, the profits of state-owned enterprises increased by 3.5 percentage points to 26.9%.
The profit differentiation between upstream industries and middle and downstream industries continued. From the two-year compound growth rate, among the 41 major industrial industries, the profit growth rate of 19 industries increased compared with the previous month, and the industries with increased profit growth rate are mainly upstream and raw material industries. In terms of three categories, from January to October, the profit of mining industry increased by 178.2% year-on-year, 16.4 percentage points higher than that of the previous month, and the manufacturing industry increased by 39% year-on-year, 3.9 percentage points lower than that of the previous month. Under the background of high raw material costs, the policy of "ensuring supply and stabilizing price" failed to effectively alleviate the downward trend of profit in the production and supply of power, heat, gas and water, down 19.7% year-on-year, Down 4.5 percentage points from the previous month. Specifically, although the current commodity prices have declined, the decline is limited. At the same time, under the influence of low base factors, the profits of upstream industries such as coal, oil and gas mining, ferrous metal mining and ferrous metal processing industry maintained a high growth trend year-on-year from January to October, with year-on-year growth rates of 210.2%, 262.7%, 119.9% and 132% respectively. The effect of the policy of "ensuring supply and stabilizing price" has not yet fully appeared. The profits of power and heat production and supply industry decreased by 29% year-on-year, 4.4 percentage points wider than that from January to September, but the decline narrowed. The profits of the high-tech industry continued to improve. In October, the profits of the high-tech manufacturing industry increased by 17.4% year-on-year, continuing the double-digit growth trend, and the contribution rate to the profit growth of Industrial Enterprises above designated size was 11.0%. The profit growth rate of pharmaceutical and computer manufacturing industries from January to October was 76.7% and 34.3% respectively. The profit growth of consumer related industries continued to be sluggish. From January to October, the profit decline of agricultural and sideline industries and food manufacturing industries further expanded, and the profit growth of textile, clothing, leather and other manufacturing industries continued to be below double digits.
The slowdown in demand may restrict the profit recovery of industrial enterprises, and the uncertainty caused by covid-19 variant still needs to be observed. In October, the short-term improvement of domestic demand and the continuous high operation of overseas demand brought some support to the profit recovery of industrial enterprises, but the foundation for the improvement of domestic demand is not solid, and the consumer side is still facing the impact of the epidemic and the pressure of slowing income growth. At the same time, the high-level operation of external demand is difficult to last, the early overseas demand is released intensively, the subsequent demand repair may slow down, and the weakening of terminal consumption may be difficult to support the demand for upstream products. Therefore, the basis for the high-level operation of commodity prices may be weakened. In addition, the continuous appearance of the effect of China's policy of "ensuring supply and stabilizing price" may alleviate the profit differentiation between upstream industries and middle and downstream industries. Covid-19 new variant Omicron may once again impact global supply and demand and become the biggest uncertain factor in the short term: the World Health Organization has warned that the toxicity and transmissibility of the new variant Omicron in South Africa may be greater than Delta, or it will bring new pressure to global epidemic prevention and control, including the European Union More than 20 countries and economies such as the United States and Japan have adopted travel bans or entry restrictions, and the global supply and demand may be impacted again in the short term. However, the impact on China's industrial production still needs to be judged by the impact of the epidemic on global supply and demand. Overall, the current weak demand side may restrict the profit recovery of industrial enterprises, and the epidemic situation is still the biggest uncertain factor.
