At this point in China’s economic cycle, stabilisation of any data series should be good news. Growth, therefore, should be even better.

Over the weekend, data from China’s National Bureau of Statistics showed that industrial profits for January and February (combined to smooth the effects of Chinese new year) grew at 5 per cent year on year, the fastest rate in 18 months. Profit growth for food and textile-related sectors rebounded strongly, as did that for some of the more heavily cyclical sectors, including chemicals and most categories of machinery and equipment.

This news is both good and bad. On the plus side, the rebound in heavy industry gives breathing space while China’s economic model shifts more towards services and consumer spending-related sectors. At just over one-third of GDP, according to World Bank data, household consumption is still not meaningful enough to offset slowing growth in heavy industry. Consumer-related sectors are also ill-positioned to take up the employment slack as industries such as steel retrench. Early this year, China’s minister of human resources estimated that about 2m workers will lose their jobs as excess capacity is closed. A rebound in heavy industry allows time for the consumer sector to expand.