China's industrial profits see worst start to a year since 2019

The profits of Chinese industrial companies had the worst start to a year in a decade, on weaker factory inflation, slowing production and seasonal factors.

Manufacturing companies' profits in January and February declined 14 percent from the same two months a year earlier, the National Bureau of Statistics said in a statement. That compares with a 1.9 percent drop in the single month data for December.

China's manufacturers are squeezed by slower factory inflation, and industrial output also trailed estimates in the first two months.

Tax reductions will provide some relief to those firms this year, while global demand will likely stay weak amid the slowing European economy and trade talks with the US.

The timing of the Lunar New Year - around which many factories and companies shut down - has weighed on the headline profit growth, according to the NBS in a separate statement after the data

China combines the readings for the first two months to smooth out effects of the traditional holiday, which falls in January or February. There is no February single-month reading.

The main sectors including auto, oil processing, steel, and chemicals saw drops in their earnings from a year earlier.

Manufacturers of consumer goods saw a healthy profit growth in the first two months, according to the NBS.