Saudi’s industrial production dips in September

The local industrial production index (IPI) fell 0.3% y-o-y in September, on the back of declines in manufacturing, electricity, gas, steam, and air conditioning supply, according to a report (pdf) from the General Authority for Statistics (Gastat). The IPI analyzes survey data to track changes in industrial production volumes across the Kingdom.

The manufacturing sub-index contracted 0.5% y-o-y, with the fall attributed to a drop in the manufacture of coke and refined petroleum products (down 12.3%). This was slightly offset by increases in chemicals and chemical products (up 2%) and food (up 12.3%). Manufacturing makes up for 35% of the overall IPI, making it the second-heaviest component after oil and minerals. September’s performance marks a downturn from the previous month’s 1.1% growth, and brings to an end seven months of back-to-back growth in the sub-index.

Mining and quarrying activity remained unchanged y-o-y, according to the report. Oil production maintained a level 8.97 mn bbl / d compared to September of last year. The mining and quarrying sectors make up 61.4% of the overall IPI.

REMEMBER- Riyad Capital had indicated in September that Saudi crude oil production was expected to begin ramping up this quarter towards a targeted 10 mn bbl / d by 4Q 2025. However, Opec’s decision last week to put off output hikes beyond December will likely delay the anticipated acceleration in Saudi oil output.

The IPI for non-oil sectors grew 5% y-o-y in September, driven by broad-based growth across most non-oil activities, with the exception of utilities. Meanwhile, the index for oil declined 2.5%.

IN CONTEXT- Non-oil activity was at a six-month high in October, with the Kingdom’s headline PMI figure hitting 56.9, up from 56.3 in September, signaling strong private sector demand. This represented the third consecutive month that Saudi’s PMI figure was on the up, with PMI “exactly aligned with its long-run average.”

Utilities was a mixed bag: The sub-index for electricity, gas, steam, and air conditioning supply activity fell 4.9% y-o-y, while water supply, sewage, and waste management and remediation activities increased 2.5%.