Coronavirus hit China's factory output output output growth in July

The slowdown adds to recent evidence of loss of economic momentum from the economic collapse.

Policymakers likely to maintain support measures to boost growth.

BEIJING, Aug 27 - Profit growth at China's industrial firms in July in 2007 grew at its slowest clip this year, as elevated raw material prices and supply chain constraints weighed by extreme weather and sporadic coronavirus cases on the manufacturing sector.

The data adds to a recent batch of indicators highlighting loss of momentum in the world's second biggest economy, suggesting policymakers will likely maintain support measures to underpin growth.

Industrial companies' profits doubled on an annual basis in July to 703.67 billion yuan data from the National Bureau of Statistics, showed on Friday 16.4%. That compared to a 20% gain in June.

China's economy has staged an impressive recovery from a coronavirus-battered slump, but the expansion is losing steam as businesses grapple with higher costs and supply bottlenecks and as consumers remain cautious with spending.

Overall, profits at industrial firms above the designated size maintained a steady growth in July. However, we have to realize that the inconsistentness and uncertainty in the recovery of corporate earnings still exist, said Zhu Hong, senior statistician at NBS.

Zhu attributed the slowdown in July to high COVID-cases and flooding as well as sporadic commodity prices that have pressured profitability for small mid-stream and downstream businesses.

In the first seven months of the year, industrial companies' profits grew a hefty 57.3% on year, due to base effects but growth slowed in the 66.9% surge in the first half 2021.

China's factory output growth showed a sharp slowdown in July, analysts expect it to come under increasing pressure due to COVID - 19 social distancing rules and tightening measures in the property sector and high-polluting industries.

Commodity prices have been on a tear in recent months, hurting the bottom lines of many mid - and downstream plants. Coke and coking coal futures increased this week to record highs, while iron ore futures hit on Thursday for the fourth day.

COVID - 19 cases of the more prolific Delta strain in July and record rainfalls at Henan province have also hurt industrial production. The terminal at Ningbo Port ceased services as part of the government's effort to curb the spread of the virus.

Liabilities at industrial firms rose 8.2% on an annual basis at end-july, down from 8.5% growth as of the end-June.

The industrial and business profit data covers big firms with annual revenues of more than 20 million yuan from their main operations.