Last verified: 1 September 2026. Saudi Arabia’s Industrial Production Index rose 4.3 per cent in June 2026 from May. It was still 16.3 per cent below June 2025. Both statements are correct; neither describes the non-oil industrial economy by itself. [S1]
The decisive fact is in GASTAT’s spreadsheet, not the headline. Oil activities carry 74.98 per cent of the index’s fixed 2021 weights. Their index fell 23.2 per cent year on year. Non-oil activities carry 25.02 per cent and edged up 0.05 per cent, rounded in the release to 0.1 per cent. [S2]
In index-point arithmetic, oil activities accounted for approximately 17.98 of the overall 17.97-point annual fall; the tiny positive non-oil contribution offset a fraction. The reported 16.3-per-cent collapse was therefore an oil-output comparison almost in its entirety.
| June 2026 component | Index weight | YoY | MoM | What the comparison says |
|---|---|---|---|---|
| General IPI | 100.00% | −16.3% | +4.3% | Oil-heavy national production headline |
| Oil activities | 74.98% | −23.2% | +4.6% | Crude extraction and refining classification |
| Non-oil activities | 25.02% | +0.05% | +3.7% | Flat annual volume, strong one-month rebound |
| Mining and quarrying | 61.44% | −27.0% | +5.1% | Predominantly crude oil and natural gas |
| Manufacturing, including refining | 35.05% | −2.3% | +1.8% | Pulled down by refined petroleum and chemicals |
| Non-oil manufacturing | 21.51% | −0.5% | +1.1% | A better diversification-production measure |
| Electricity and gas supply | 2.82% | +2.8% | +25.4% | Large monthly rate, small weight and seasonal sensitivity |
The appropriate reading is not “Saudi industry collapsed” and not “industry recovered”. It is: oil-related production was far below an unusually strong year-earlier level, while non-oil industrial volume was broadly unchanged and improved from a disrupted May.
Why the index is so oil-heavy
GASTAT’s IPI measures the volume of output in mining and quarrying, manufacturing, electricity and gas, and water and waste services, using 2021 as 100. It is not an index of factory counts, industrial investment, company revenue or industrial GDP.
The production structure drives the weights. Extraction of crude petroleum and natural gas alone carries 61.44 per cent. Manufacture of coke and refined petroleum products carries another 13.53 per cent. GASTAT groups both as “oil activities”, producing the 74.98-per-cent total. [S2]
That construction is analytically useful because it identifies output exposed to oil operations. It creates a terminology trap: “manufacturing” in the industry table includes refining, while “non-oil manufacturing” in the oil/non-oil split excludes it.
Thus, total manufacturing fell 2.34 per cent year on year, but the non-oil-manufacturing component fell only 0.53 per cent. A headline saying “manufacturing fell 2.3 per cent” is arithmetically correct. A reader using it as evidence of a 2.3-per-cent contraction in diversification industries would be wrong.
The annual decline begins with crude extraction
Mining and quarrying’s index fell from 103.51 in June 2025 to 75.60 in June 2026. Because crude and natural gas extraction is the entire published line in this release, it was down 27.0 per cent. [S2]
The IPI does not itself attribute the fall to an OPEC+ quota, a voluntary cut, field maintenance, export disruption or another operating cause. It reports volume. Policy and geopolitical attribution requires production and energy-market evidence outside the index.
That matters especially in 2026. The IMF said the regional war had curtailed Saudi oil exports and disrupted trade, even as rerouting through the East–West pipeline limited the fall in deliveries. [S3] The 27-per-cent extraction decline is consistent with a large oil-output shock, but the GASTAT series alone cannot allocate it among policy, logistics and production decisions.
The June month-on-month increase also starts with extraction: mining rose 5.05 per cent from May. Given its 61.44-per-cent weight, that change contributed roughly 2.23 index points to the general index’s 3.79-point monthly rise. It was the largest single component of the rebound.
One should not annualise it. A 5.1-per-cent rise after a depressed month can be a partial normalisation; repeated readings are required before calling it a trend.
Non-oil manufacturing was mixed, not uniformly weak
The detailed table shows a portfolio rather than one direction.
Basic metals increased 4.9 per cent year on year, beverages 1.8 per cent, furniture 0.8 per cent and paper products 0.3 per cent. Food manufacturing fell 3.8 per cent, chemicals 2.6 per cent, electrical equipment 1.9 per cent and other non-metallic mineral products 0.9 per cent. [S2]
The basic-metals increase is evidence of higher output in that classified activity; it is not proof that a particular new smelter or mill caused it. Public capacity announcements and production starts would need plant-level verification before making that connection.
Chemicals matter disproportionately. Their 8.15-per-cent index weight is more than half of the disclosed non-oil manufacturing subsectors in the table. The 2.6-per-cent annual fall therefore pulled down the non-oil result more than faster growth in much smaller beverages or furniture categories could lift it.
Refined petroleum products fell 6.0 per cent year on year but rose 3.1 per cent from May. Since refining represents 13.53 per cent of the total index, its annual decline explains part of the difference between total manufacturing at −2.3 per cent and non-oil manufacturing at −0.5 per cent.
The 4.3-per-cent rebound also contains a power-season effect
Electricity, gas, steam and air-conditioning supply jumped 25.4 per cent month on month. That is the largest percentage change in the release, but its weight is only 2.82 per cent. It contributed about 0.82 index points to the general monthly rise.
June electricity demand is seasonally sensitive as temperatures climb. GASTAT’s published monthly change is not identified in the release as seasonally adjusted. Comparing May with June can therefore mix genuine economic acceleration with the predictable summer load.
Water, sewerage, waste management and remediation increased 3.9 per cent monthly and 6.0 per cent annually. Its weight is just 0.69 per cent. The positive direction is real; the contribution to the national headline is small.
PMI and production answer different questions
Riyad Bank’s Saudi PMI rose to 53.3 in June from 52.8 in May, signalling expansion in the non-oil private sector and a four-month high. [S4]
This does not contradict flat non-oil industrial production. The PMI surveys private businesses across manufacturing, construction, wholesale, retail and services and asks whether conditions improved relative to the previous month. The IPI measures output volume in a narrower set of industrial activities and provides both monthly and annual comparisons.
The two releases agree on one point: June was better than May. They do not prove that non-oil industrial volume exceeded the level of a year earlier by a meaningful amount.
Countercase: flat annual output can conceal capacity building
The IPI is an output measure. A new factory under construction, a licence issued, machinery being installed or a logistics building leased contributes little or nothing until production begins. Capacity investment can therefore rise while current output is flat.
Conversely, factory counts can increase while aggregate production stagnates if new units are small, older plants operate below capacity or the mix shifts to lower-volume activities. It is invalid to use the number of industrial establishments as a rebuttal to the output index without normalising capacity and production.
The positive reading is that non-oil activity held its year-earlier level despite regional disruption, while the monthly index and PMI both improved. The harder reading is that diversification did not generate enough additional industrial volume to register more than 0.1 per cent annual growth.
What would falsify this assessment
GASTAT marks the June figures preliminary and states that the latest three months are updated. A substantial revision could change the exact decomposition. July and August data could also establish a durable recovery or show that June was only a bounce.
The “oil shock, flat non-oil” assessment would be superseded by several months of rising non-oil IPI, broad gains across chemicals, food, metals and equipment, and production starts translating licensed capacity into volume. It would become more negative if non-oil manufacturing falls even after oil extraction normalises.
For investors, the clean dashboard is four lines: crude extraction, refining, non-oil manufacturing and utilities. The general IPI remains valuable, but in Saudi Arabia its fixed weight makes an oil-production decision look like an economy-wide industrial verdict. June 2026 is the clearest example of why the decomposition must come first.
Related Vision 2030 Context
- Saudi business revenues rose even as industrial output remained below year-earlier levels
- Aramco and Ma’aden’s exploration venture begins with subsurface data
- Saudi trade’s national surplus and non-oil exports answer different questions
Sources
- [S1] General Authority for Statistics, Industrial Production Index, June 2026, preliminary headline release, 10 August 2026. GASTAT publication page
- [S2] General Authority for Statistics, Industrial Production Index June 2026 data workbook, 2021 weights, index levels and annual/monthly changes. GASTAT IPI workbook listing
- [S3] International Monetary Fund, “Executive Board Concludes 2026 Article IV Consultation with Saudi Arabia,” 29 July 2026. IMF statement
- [S4] S&P Global / Riyad Bank Saudi Arabia PMI, June 2026, as reported 5 July 2026. Saudi PMI data summary