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Business Activities Up in UAE as Saudi Awards More Than SAR 100 Billion in Contracts and Cansult Maunsell Merger Creates Massive Middle East Consultancy

Middle East : 09 August 2013

PMI Goes Up In July With Greater UAE Non-Oil Business Activities

Business activities in the UAE non-oil industry went up in July, supported by new export orders. This improvement indicates a healthy UAE economy, despite the uncertain conditions in other emerging markets, according to the HSBC.

The Purchasing Manager’s Index by HSBC moved up from June’s result of 54.1, to 54.5 in July. Any reading beyond 50 indicates an expanding economy.

According to the bank, the data from July signaled greater increases in output levels and the intake of new orders at private companies within the UAE’s non-oil industry. New business activities from abroad increased at a sharp rate not seen since January, while employment levels went up even more, although at a slow pace.

HSBC’s Chief economist for the MENA region, Simon Williams noted that these positive readings shed light on the momentum in the UAE, and contrast with other emerging markets that seem to be slowing down. Williams stated that inflationary pressures remain quiet in spite of robust demand, and wages appear to be gaining at a slow rate.

The PMI index uses data from Markit, covering monthly questionnaire replies returned by purchasing executives within 400 businesses in the private sector.

Saudi Arabia Awards SAR 102 Billion in Contracts

Over SR 102 billion, or Dh 101 billion, in contracts have been awarded in the Kingdom during the first six months of 2013. A majority of these contracts involved real estate and construction, according to the National Commercial Bank (or NCB).

During Q2, approximately SR 53.8 billion in contracts were awarded in Saudi Arabia, a higher level of government contracts than the month before, according to NCB.

A recent NCB study stated that extended growth in the awarded contracts value over the course of the second quarter pushed the six-month level to SR 102.7 billion.

The real estate sector absorbed many of those contracts, accounting for almost 39 percent of the overall awarded contracts value in the second quarter. This percentage includes both mixed-use and residential projects.

Over the course of six months, the real estate sector saw around 30 percent of the overall awarded contracts value. The government sector made a significant contribution as well, accounting for nearly 19 percent of overall contracts awarded in the second quarter.

Contracts including the transportation, power or oil & gas industries increased to report a sustained level of growth and seeing 23 percent of Q2 projects awarded.

Saudi’s construction market remains strong, supported by pressure exerted within the private sectors and government, pressure to diversify expenditures and spread them out.

The value of awarded contracts fell from SAR 126.7 in the first half of 2012, dropping by 19 percent in 2013.

A great number of mega projects involving various sectors will keep the action going in the second half of 2013. This increase should shrink the difference between 2012 and 2013 figures.

When breaking up the awarded contracts by geographic location, it appeared that a majority of the contracts involve the Makkah region of the kingdom. Real estate remains strong there, and helped the Makkah region to account for 36 percent of overall value. A large SAR 13 billion mega project involving mixed-use real estate helped to deliver this result.

Around 20 percent of the overall value of awarded contracts involved the Riyadh region. Because the Eastern Province did not begin the mega-projects as experienced in the past in petrochemical, oil and gas and industrial sectors, this region’s share dropped to 14 percent f overall awarded contract value, according to the NCB.

Saudi Arabia continues to diversify and experience the benefits of this development, as spearheaded by the government and executed with the help of the private sector, according to the report.

The amount of activity in construction and real estate reflect the need for continued development and large-scale projects designed to meet the rising demand. Also, the industrial and petrochemical sectors have not moved up this year, although they are forecasted to perform well and contribute a respectable share to the overall value of contracts awarded in 2013.

Cansult and Maunsell Join to Form Massive Middle East Consultancy

Consulting firms Maunsell and Cansult are merging, coming together in Cansult Maunsell and entering the list of the largest Middle East consulting firms.

Also being formed in this merger is Aecom’s first company operating in the Middle East. Aecom has 17 companies operating around the globe.

Rankings place Aecom as the leading pure design firm in the world, with operations spanning five continents, 28,000 employees and US $3.4 billion in annual revenue.

Nigel Robinson, chief executive of Aecom, noted that this Middle East company is expected to bring in more than $100 million in revenues and employ over 1,500 people.

The merger reflects the commitment stated by Aecom to sustain robust economic growth and provide major opportunities within the local construction industry. It also brings two firms with plenty of talent and brand power together.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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