Industry profit data from China
- Prior was -2.9% y/y
- Profits up 1.9% ytd
This is a low-tier indicator, but with markets on edge about China it could make them jittery. I was prepared to completely brush aside this release but the economic calendar is very light in Asia today. The lone other indicator is at 0500 GMT when Japan releases leading indicators.
That could mean this gets extra focus and that headline is ugly.
Update:
The Chinese statistical bureau is out with damage control on the soft reading. They say that costs (not sales) were behind declining profitability. They said the catalyst was the declining exchange rate.
If you add the 5% yuan decline to the 2.9% fall, that brings it to 7.9%, which (in the most simplistic way possible) might help to explain the loss. Still, that doesn't pass the smell test for me. Currencies around the globe routinely fall 5% in a month and you don't see corporate profits immediately crater.
I think AUD is vulnerable here.
