1. Introduction to the Industrial Production Index (IPI)
The industrial production index measures relative changes and reflects the development in the volume of production of materials and commodities. Industrial production means the process of converting raw materials (inputs) into consumables in their final form in the form of commodities (outputs) in order to achieve a material, return for the facility.
The basket of the industrial production index contents of following economic sectors:
1. Mining sector: which includes oil and gas extraction, with a relative weight of 82.46%.
2. Manufacturing sector: which are produced locally, such as food industries, petroleum refining, iron and steel industries, and petrochemicals. And other industries, with a weight of 15.85%.
3. Electricity Sector: which includes electricity generation, transmission, and distribution of electric power, with a weight of 1.16%.
4. Water sector: which includes water collection, treatment, and delivery, with a weight of 0.53%.
Each main activity is classified according to (ISIC) and is further divided into sub-groups based on the international classification (CPC.ver.2.1). The index of industrial production is calculated using the Laspeyre formula for indices, which is the well-known mathematical formula in the statistics field, that calculates the index using levels of values weighted by the weights of the base period. The base year has been changed by adopting the base year of 2018, and the weights (importance) have been calculated by using the production values of industrial products in that year. This report is considered the second quarterly release during year of 2024.
2. Key highlights of IPI in Q2, 2024.
The general index reached 97.10 points in the second quarter of 2024, with a decrease of 5.1% compared to the previous quarter (the first quarter of 2024), and a decrease of 6.0% when compared with the corresponding quarter in 2023.
The sectors that make up the index also recorded several changes compared to the previous quarter, as the mining and quarrying sector index reached 96.27 points, decreased by 6.9%, the manufacturing industry index scored 99.87 points, increased by 1.4%, the electricity supply sector index reached 115.63 points, increased of 50.6%, and the index for the water supply sector recorded 102.44 points, increased by 3.3%.
3. Quarterly comparison Q2, 2024 vs Q1, 2024 (Q-O-Q).
The general index in the second quarter of 2024 reached 97.10 points, decreased by 5.1% when compared with the previous quarter (Q1-2024). This happened as a result of the changes in production in the main sectors:
A. Mining sector:
This sector is considered one of the most important reasons affecting the trend of the general index, given that its relative weight represents 82.46% of the total basket making up the industrial production index. The index for this sector indicated a decrease of 6.9% compared to the previous quarter (Q1-2024), due to the decrease in the “extraction of crude oil and natural gas” group by the same percentage mentioned above, other mining and quarrying recorded a decrease of 2.6%.
B. Manufacturing sector:
The index of this sector, which includes eight sub-groups, indicates an increase of 1.4% compared to the previous quarter (Q1-2024), due to the increase in five groups and a decrease in three. The groups showed an increase include: “Manufacture of beverages” by 12.3%, followed by “Manufacture of Coke and refined petroleum products” by 6.4%, “Manufacture of chemicals and chemical products” by 2.6%, “Manufacture of rubber and plastics products” by 1.1%, and “Manufacture of food products" by 0.2%. However, a decrease was recorded in “Manufacture of basic metals” by 25.2%, “Manufacture of Cement and Other non-metallic mineral products” by 8.4%, and “Printing and reproduction of recorded media” by 3.3%.
C. Electricity supply sector:
The index of this sector recorded an increase of 50.6% in the second quarter of 2024, compared to the previous quarter (Q1-2024), and since the relative weight of this sector is very small, there was no noticeable impact on the general index.
D. Water supply sector:
The index of this sector recorded an increase of 3.3% in the second quarter of 2024, compared to the previous quarter (Q1-2024), and due to the fact that the relative weight of this sector is very small, there was no noticeable impact on the general index.
4. Annual comparison Q2, 2024 vs Q2, 2023 (Y-O-Y):
The index decreased in the second quarter of 2024 by 6.0%, compared to the corresponding quarter of 2023, and this was due to the changes that occurred in the production of the main sectors.
A. Mining sector:
This sector is considered one of the most important reasons affecting the trend of the general index, given that its relative weight represents 82.46% of the total basket making up the industrial production index. Where the index for this sector indicates a decrease of 6.7% compared to the corresponding quarter (Q2-2023), due to the decrease in the “extraction of crude oil and natural gas” group by the same percentage, and (other mining and quarrying) decreased by 8.1%.
B. Manufacturing sector:
The index of this sector, which includes eight sub-groups, indicates a decrease of 3.4% compared to the corresponding quarter (Q2-2023), due to the decrease in four groups and the increase in four. The groups that recorded a decrease are: “Manufacture of basic metals” by 32.7%, followed by “Manufacture of cement and other non-metallic mineral products” by 3.4%, “Manufacture of Coke and Refined petroleum products” by 0.2%, and “Manufacture of rubber and plastics products” by 0.1%. However, an increase was recorded in: “Manufacture of beverages” by 1.8%, “Printing and reproduction of recorded media” by 1.4%, “Manufacture of food products” by 0.7%, and “Manufacture of chemicals and chemical products” by 0.5%.
C. Electricity supply sector:
The index of this sector recorded an increase of 4.0% in the second quarter of 2024, compared to the corresponding quarter (Q2 - 2023). Since the relative weight of this sector is very small, there was no noticeable impact on the general index.
D. Water supply sector:
The index of this sector recorded a decrease of 1.9% in the second quarter of 2024, compared to the corresponding quarter (Q2 - 2023). Since the relative weight of this sector is very small, there was no noticeable impact on the general index.
