China’s Industrial Profit Growth Slows to Weakest Pace This Year

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(Bloomberg) — China’s industry saw profit gains slow for a second month, adding to evidence of an uneven recovery for companies across parts of the world’s second-biggest economy.

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Industrial profits rose 15.1% last month from a year earlier, the weakest increase this year and down from a 21.1% jump in May, according to data published by the National Bureau of Statistics on Monday. 

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For the first half of the year, companies grew earnings by 18.7%, compared with a Bloomberg Economics forecast of 19.2%.

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China ended its record deflationary run last quarter even as price increases remain largely confined to oil and sectors linked to artificial intelligence. Though the cost of goods at the factory gate surged in June at the fastest in almost four years, producer prices had their first drop since July 2025 on a month-on-month basis, in a sign inflationary momentum has waned.

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The global buildout of AI infrastructure has fueled demand for China’s advanced manufactured goods, while disruptions to energy markets caused by the conflict in the Middle East have lifted commodity costs.

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But slumping domestic investment and sluggish household spending could be more of a hurdle for profitability in the months ahead, especially in the absence of stronger stimulus to boost demand.

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“The improvement in corporate profits may prove short-lived,” Adam Wolfe, an economist at Absolute Strategy Research, said in a report last week. “The tailwinds for AI-linked sectors may persist, but the rest of the economy seems likely to face stronger headwinds. If so, corporate profits could become increasingly K-shaped.”

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