China’s industrial profits dropped at a slower pace in June, though worsening factory-gate deflation and slowing consumer spending still continued to squeeze business’s margins.

Profits last month slid 8.3% from a year earlier, compared with a decrease of 12.6% in May, data published by the National Bureau of Statistics showed Thursday. For the first half of 2023, profits fell 16.8%, easing from the 18.8% drop in the first five months.

The economy’s recovery lost traction in the second quarter as the property market slumped, exports contracted and retail sales growth waned. Soft demand led consumer inflation to flatline, while producer prices dropped at a deeper pace.

The streak of industrial profit declines underlines the deteriorating operating conditions for companies. Business confidence has been battered and firms have held off on investing, which in turn has pressured growth.

At a meeting this week about the rest of the year’s economic policy agenda, China’s top leaders signaled more support for the troubled real estate sector, as well as pledged to boost consumption and resolve local government debt.

However, they fell short of announcing large-scale stimulus to support the recovery as they appeared confident that growth is still on track to achieve the rather conservative official goal of around 5% this year.