BEIJING — China’s industrial profits fell 1,7% in June from a year earlier, easing from May’s 5,3% decline and raising hopes that the world’s second-largest economy may be stabilising as policy stimulus gains traction.

The government has stepped up policy easing in recent months, cutting interest rates twice in June and July and fast-tracking infrastructure investment projects.

Chinese factories made combined profits of 468,2 billion yuan ($73,34 billion) in June, the National Bureau of Statistics said on Friday.

Profits amounted to 2,3 trillion yuan in the first six months, down 2,2% from a year earlier, moderating from a decline of 2,4% during January-May period, the agency said in a statement published on its website, www.stats.gov.cn.

“The decline of industrial profits slowed in June, sending out a positive message that the economy is in the process of stabilising,” Zhang Zhiwei, chief China economist at Nomura in Hong Kong told Reuters.

“The pace of economic recovery largely hinges on further policies to be taken by the government in the coming months.”

Zhang expects industrial profits to pick up in the second half and could show growth in some month in the third quarter, partly due to falling commodity prices that help reduce corporate costs.

China’s annual economic growth slowed to a three-year low of 7,6% in the second quarter while factory-gate prices drop as demand at home and abroad slackens, cutting into corporate earnings.

China’s industry ministry said earlier this week that clear signs were seen from the industrial sector that the economy started to stabilise and may pick up in the second half.

Among the 41 industries being tracked by the statistics bureau, 27 sectors posted profit growth and 13 industries reported a profit drop in the first six months compared with the year earlier period.

Profits of ferrous metal miners plummeted 56,5% while those of chemical, material and product industries dropped 22,5% during the same period.

Petroleum refining, coking and nuclear fuel processing sectors swung into losses from gains in the first six months.

In contrast, power and heat generators and suppliers saw a big profit jump in the first half, with earnings rising 23,8% from a year ago, the agency added.

Automobile manufacturers and companies producing agricultural products also fared well in the first half, with profits rising 16,5% and 10%, respectively.

The NBS indicator of year-to-date profits covers industrial firms with annual revenue above 20 million yuan.

Apart from industrial profits, some leading economic indicators also pointed to signs of improvement in the broader economy.

China’s flash factory purchasing managers index rose in July to its highest level since February, boosted by improvement in output and new export orders, offering fresh signs that the world’s second-largest economy could manage to steer a soft-landing.

Economists in a recent Reuters poll forecast that China’s economic growth will pick up in the second half of this year.