China’s leading private firms slashed their workforce last year despite a slight growth in financial performance, according to a report published by the country’s largest business association for the key group.

The 500 private enterprises, which often have stronger risk-resistance capabilities, employed 10.66 million people in 2023, the semi-official All-China Federation of Industry and Commerce said on Saturday, a reduction of 314,600 jobs compared to a year earlier.

“The fact employment fell despite revenues rising highlights the uncertainty facing firms,” said Harry Murphy Cruise, an economist at Moody’s Analytics.

“Increased automation and a push to lift efficiency in highly competitive markets could also be a factor,” he added, noting that most of the firms surveyed are in manufacturing.

The number of manufacturing firms, a traditionally labour-intensive industry, accounted for 66.4 per cent, or 332 of the total, up from 322 last year.