China's Industrial Profits Growth Slows in May Amid Patchy Recovery

China's industrial profits experienced a significant slowdown in May, with earnings rising by just 0.7% year-on-year compared to a 4% increase in April, according to data from the National Bureau of Statistics (NBS). The cumulative profit growth for the first five months of the year also fell, decreasing from 4.3% to 3.4%. This comes amid a series of downbeat economic indicators, with weak domestic demand affecting overall growth.

The property sector has not shown a positive response to a recently announced "historic" rescue package. In the automobile industry, a major driver of consumer discretionary growth, profit margins were 4.6% in the first four months, below the overall factory sector average of 5%. State-owned firms saw a 2.4% drop in profits, while foreign firms experienced a 12.6% decline. Conversely, private-sector companies reported a 7.6% increase in profits. In response to the weak domestic demand, China's state planner has encouraged local governments to ease car purchase restrictions.