(Yicai) Aug. 28 -- Profits at Chinese industrial firms fell by less last month than in June, as a slew of government policies to boost the economy worked through.

Profits at industrial companies with annual revenue of at least CNY20 million (USD2.8 million) fell 6.7 percent in July from a year earlier, slowing from an 8.3 percent drop the prior month, according to figures released by the National Bureau of Statistics yesterday.

From January to July, profits sank 15.5 percent from a year ago, following a 16.8 percent slide in the first six months, it added.

Demand will likely pick up now as stimulus policies take effect, said Wu Chaoming, deputy dean of the Chasing Institute. Firms that have been cutting excess inventory will also stop doing so soon, he said, boosting profitability in the second half.

But a sustained uptick still faces many challenges, Wu said. A recovery in the real estate sector is highly uncertain, investment confidence at private companies is faltering, weak external demand is dragging down exports, and there is a high probability that any new stimulus measures would be mild, he said.

July’s decline in overall industrial profits was considerably eased by a less precipitous drop at raw material manufacturers, which logged a 7.7 percent fall versus a 37.3 percent dive in June, as supply and demand improved among other factors.

Industrial firms also saw their costs fall in July for the first time this year, dipping CNY0.55 (USD0.07) to CNY85.15 (USD11.69) per CNY100 of operating revenue, the NBS data showed.

Commodity prices are low, raw material cost pressures on mid- and downstream firms has eased, and the unit cost of industrial firms has generally increased, said Sun Xiao, an NBS statistician.

Editor: Kim Taylor