US IT Spending Update: Q2 2007

As expected, the Q1 2007 IT investment and purchases data showed a distinct slowdown in growth from the first half of 2006. However, the weakness was not as pronounced as in the fourth quarter of 2006, indicating that the worst of the slump has already happened. Growth in the second quarter of 2007 should show signs of improvement when the data starts to come in during July and August, and IT purchases should strengthen in the second half of the year. Software continues to be the bright spot in the US tech market, with 7% to 8% growth rates. Computer equipment investment, which took a hit in late 2006, is starting to improve, but communications equipment investment is headed in the other direction. Another bright spot has been the IT jobs category, which grew more strongly than expected in 2006, with a comparable year in prospect in 2007. Demand is strongest for database administrators, network and computer systems administrators, network systems and data communications analysts, and computer research scientists. Salary growth still remains moderate, though, at around 3%.