Mubasher: Profits at China’s industrial sector fell in August, after a gain in July, indicating a re-emerging pressure on balance sheets at companies due to a stuttering demand and the bitter trade conflict with the US.

Industrial profits dropped by 2% last August year-on-year to 517.8 billion Chinese yuan (CNY) ($72.64 billion), compared with a 2.6% gain in the preceding month, the National Bureau of Statistics (NBS) said on Friday.

The profit contraction was mainly led by slowing sales and plunging factory-gate prices, NBS senior statistician Zhu Hong said.

Chinese producer prices, a major gauge of domestic demand and profitability, recorded the sharpest fall since three years last month.

Moreover, the weakening corporate earnings matched disappointing figures on both domestic and external demand.

Chinese industrial production growth dropped to its weakest level since 7 years and a half in August, as exports dropped against the backdrop of a crippling trade war and faltering demand.

Since the second half of last year, Chinese industrial earnings have been generally waning, with a few transitory rebounds, as falling producer prices raised the risk of a further drag on corporate profits, while economic growth hovered near the lowest level in 30 years.

In the period between January and August, industrial firms generated CNY 4.02 trillion, 1.7% lower than the corresponding period last year, the same year-on-year drop in the seven months to July.

Industrial businesses’ liabilities advanced by 5% year-on-year to CNY 65.81 trillion, versus a 4.9% increase in the prior month.

Private sector earnings posted a year-to-date surge of 6.5% last month, slowing down from a 7% growth in the previous month.