BEIJING - China's machinery sector reported better-than-expected performance in the first half of 2017 although high costs and financing difficulties continue to weigh on profits.

Profits of machinery manufacturers amounted to 857.6 billion yuan (about $127.6 billion) during January-June, up 14.69 percent year on year, according to the China Machinery Industry Federation (CMIF).

The main business revenue came in at 12.51 trillion yuan, rising 11.6 percent from the same period last year, with that in agricultural machinery, combustion engines, construction machinery and instruments all seeing double-digit growth.

Chen Bin, deputy head of CMIF, attributed the improvement to business innovation and transformation, as well as a low comparison base last year.

But high labor and logistics costs, and financing difficulties were still a trouble for the industry, Chen added.

He predicted both business revenue and profits in the sector to expand 8 percent, with exports in 2017 to end two years of negative growth.

The sector's recovery came as China's economy has gained a steadier footing in recent months, with growth expanding 6.9 percent for the first half of 2017, better than market expectations.