(Yicai Global) June 27 -- China's big industrial companies narrowed their profit declines last month as production rebounded amid policy support.

Industrial enterprises above designated scale reported a 6.5 percent decrease in profits in May from a year ago, reducing the pace of falling by 2 percentage points from April, as supply chain disruptions gradually subsided and tax and fee cuts took effect, according to data the National Bureau of Statistics revealed today.

The direction is up. Despite facing rising costs, industrial companies are expected to increase their profits going forward, Zheng Houcheng, director at Yingda Securities' research institute, said in an interview with Yicai Global. Macroeconomic recovery will continue and a package of policies to stabilize growth will come into play, Zheng added.

Next, China needs to deploy policies and measures to alleviate industrial firms' difficulties and promote sustainable recovery, said Zhu Hong, senior statistician at the NBS. Companies have been under large pressure from rising costs and uncertain recovery prospects as the international situation is becoming more complex, said Zhu.

One indicator was clearly pointing to recovery. Firms' revenues rose 6.8 percent in May from a year ago, increasing quicker than in April, per the NBS. The boost created favorable conditions for profit improvement as production and logistics disruptions gradually eased, said Zhu.

The time of lockdowns is ending as, for example, Shanghai ended its two-month lockdown on June 1. The trend shows in statistics. In the Yangtze River Delta and northeastern China, year-over-year profit slumps narrowed in May. The declines shrank by more than 20 percentage points in Shanghai, as well as in the three provinces of Jiangsu, Jilin, and Liaoning.

Still, some sectors were rallying. Last month, profits of the coal industry more than doubled from a year ago. Moreover, those of the oil and natural gas exploitation industry also grew more than twofold. These two sectors, gaining on capacity increases, supply guarantees, and surging prices, drove the overall profit tally to rise by 9.5 percentage points, according to Zhu.

Some sectors were recovering quicker than others. The equipment manufacturing industry logged a 9 percent decline in profits in May from a year earlier, narrowing the pace of falling by 23.2 percentage points.

This year's growth is not yet negative. In the first five months of this year, industrial enterprises above designated scale recorded a 1 percent increase in profits to CNY3.44 trillion (USD514.5 billion) from a year earlier, according to the NBS.

Editors: Xu Wei, Emmi Laine, Xiao Yi