Forrester/ITAA US Tech Sector Index: Q4 2006

The health of the US tech sector improved in Q4 2006, and the sector posted its best performance in five and a half years, based on the readings from the Forrester/ITAA US Tech Sector Index. The index rose two points compared with Q3 2006, and 5.6 points from Q4 2005. Fourth-quarter results were mostly positive, with seven of the 11 underlying measures showing gains for the quarter. The strongest gains were in the financial strength indicators like US-based vendor profits and the Dow Jones US Technology Index, which grew along with the broader market. However, there were some clouds on the horizon. Two of the forward-looking measures were flat or down in the quarter. US revenues of leading IT vendors were also down. Foreign sales, not higher domestic demand, have been driving vendor revenues and profits. Put another way, the US tech sector is doing well in spite of the US market.