Industrial profits fell 2% in August from a year earlier to 517.8 billion yuan ($72.59 billion), data released by the National Bureau of Statistics (NBS) on Friday showed. That compared with a 2.6% gain in July.
Profits have slowed since the second half of 2018, despite some transitory rebounds, with falling factory-gate prices threatening to further knock profits as economic growth skidded to a near 30-year low.
As a result, policymakers are widely expected to unveil more support measures to boost a slowing economy amid sluggish consumption, rising export pressure and faltering domestic demand.
The decline in profits was in line with grim manufacturing readings in August with industrial production growth falling to its weakest in 17-1/2 years while exports also tumbled.
"Given strong growth headwinds and elevated US-China trade tensions, we expect the economy to worsen before getting better and believe Beijing will likely ramp up its policy stimulus," analysts from Nomura said in a note.
Producer prices, one key barometer of domestic demand and indicative of profitability, posted their sharpest fall in three years last month.