China’s industrial profits post faster gains in June despite faltering economy

China’s industrial profits grew at a faster clip in June, official data showed on Saturday, even as businesses were grappling with a downshift in consumers’ sentiment amid a shaky economic recovery.

A 3.6% year-on-year rise in profits last month followed a 0.7% gain in May, while first-half earnings were up 3.5%, accelerating from a 3.4% increase in the January-May period, National Bureau of Statistics (NBS) data showed.

The robust data contrasted with a slowing economy, which missed forecasts in the second quarter as the consumer sector was downbeat amid job market woes and a protracted housing downturn.

Roughly half of more than 10 mainland-listed alcoholic beverage firms that had released forecasts for H1 earnings expected a loss-making first half.

Yet in spite of rising trade tensions with the West, optical transceiver firms Zhongji Innolight and Suzhou TFC Optical Communication  forecast multi-fold rises in first-half earnings, as the two suppliers for U.S. chip giant Nvidia turn out to be big winners from a global artificial intelligence build out.

China is trying to provide heavier monetary stimulus to prop up its fragile economy, surprising markets for a second time on Thursday by conducting an unscheduled lending operation at steeply lower rates. Only days earlier the authorities cut several benchmark lending rates in the wake of a top leadership meeting, which had mapped out other major reforms.

The country’s state planner and finance ministry announced plans on Thursday to arrange about 300 billion yuan of funds from ultra-long special treasury bonds to step up a nationwide equipment upgrade and consumer goods trade-in campaign.

State-owned firms reported profits up 0.3% in the first half, foreign firms recorded an 11% gain, while private-sector companies booked a 6.8% rise, according to a breakdown of the NBS data.

Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.75 million) from their main operations.