Profits earned by China's industrial firms contracted at a faster pace in January-November, as renewed COVID-19 outbreaks and shrinking demand curbed factory activity, according to the National Bureau of Statistics.

Industrial profits fell 3.6 percent in the first 11 months from a year earlier to 7.72 trillion yuan ($1.11 trillion), data released by the NBS showed on Tuesday, following a 3 percent decline in the first 10 months.

The industrial profit data covers large firms with annual revenues of at least 20 million yuan from their main operations.

The drop in January-November profits was mainly driven by declining profits in the steel and oil processing sectors and two key COVID-19 vaccine enterprises, NBS senior statistician Zhu Hong said in a statement accompanying the data.

Excluding the above-mentioned sectors and key enterprises, the profits earned by other industrial enterprises increased by 6.6 percent year-on-year in the first 11 months.

Producer price inflation, one gauge of industrial profitability, showed an annual fall for a second month in November, rekindling worries about slowing demand and weak activity.

During the first 11 months, profits at manufacturing sector shrank by 13.4 percent, while profits of mining sector and industrial firms that offer the supply of electricity, heat, gas and water grew by 51.4 percent and 26.1 percent, respectively.

Tuesday's data showed that the business profit structure of industrial firms continues to optimize, as profits earned by some midstream and downstream enterprises post an uptick in profit margin.

Notably, profits of the equipment manufacturing industry jumped 3.3 percent year-on-year during January-November, 0.1 percentage points higher than that in the first 10 months. The sector's profits accounted for 33.1 percent of the total during the period, expanding by 0.9 percentage points in the first 10 months.

Zhu said the COVID-19 pandemic will continue to weigh on the recovery of industrial profits in the short term, and it also faces multiple pressures from shrinking demand, supply shocks weakening expectations.

To consolidate the recovery momentum of the industrial economy, Zhu said more efforts should be made to better coordinate pandemic prevention and control with economic and social development, ensures smooth industrial and supply chains, significantly boost domestic demand and energize the market entities.