(Yicai Global) June 28 -- The decline in China’s industrial profits slowed for the third consecutive month in May as the economy stabilizes and production picks up, according to official data.

Profits at industrial firms with annual turnover of at least CNY20 million (USD2.8 million) fell 12.6 percent to 635.8 billion (USD88 billion) last month from a year ago, data released by the National Bureau of Statistics showed today. Profits fell 18.2 percent in April and over 19 percent in March.

In the first five months, profits sank 18.8 percent to CNY2.7 billion (USD369.3 billion) from a year earlier, down from a 20.6 percent plunge in the first four months, according to the NBS data.

Manufacturers’ profits fell 7.4 percentage points more slowly last month than in April. As the effects of promotion policies and measures gradually appear, manufacturing profits have improved significantly, said NBS statistician Sun Xiao.

Profits among equipment makers rose 15.2 percent from a year earlier, maintaining rapid growth and remaining the category contributing the most among all manufacturers. Consumer demand continued to recover last month, with the decline in profits among consumer goods producers narrowing 17.1 percentage points from April.

The recovery of industrial profits still faces many difficulties, Wu Chaoming, vice president of Chasing Financial, told Yicai Global. The producer price index, the main factor affecting industrial profits, is expected to bottom out around the middle of the year and remain in negative territory, Wu noted.

With the economic recovery, enhancement of endogenous momentum, and improvement of social expectations, profit growth is more likely to return in the fourth quarter, said Pang Ming, chief economist at Jones Lang LaSalle China.

Industrial profits continue to recover, but the external environment is more complex, and domestic demand is still inadequate, so the foundation for a pickup in profits is not yet solid, Sun pointed out, adding that it is necessary to promote policies that sustain the economic recovery and focus on expanding effective demand.

Editor: Futura Costaglione