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IDC's FutureScan: All the Signs Say It - 5% U.S. IT Growth in 2006

04 Jan 2006

FRAMINGHAM, Mass., January 4, 2006 For the first time in the 18-month history of IDC FutureScan, all the indicators have lined up to depict an expectation of 5% growth in U.S. IT spending this year. Buyer expectations come in with an index value of 1047 (4.7% expected growth), vendor revenue forecasts come in at 1045, and the macroeconomic indicator at 1059. IDC's most recent forecast for U.S. IT spending growth in 2006 is 5%.
"In our world," says John Gantz, IDC's Chief Research Officer, "this is syzygy that moment when all the planets line up in orbit. It just doesnt happen often. Either the stock market is jumpy or users experience a temporary euphoria when filling out our survey, or Wall Street is shunning high tech. While we don't think the indicators will stay this close in future editions of FutureScan, we are gratified that they bracket our official forecast for IT spending."

The indicators actually dropped a bit from last month 25 points on the Buyer Intent and 6 points for the Market Indicators. Gantz attributed the fall in macroeconomics to lower expectations for GDP and profit growth in the U.S. for 2006 compared to 2005, and the fall in user expectations to an "echo" of the reaction to Katrina.

"Users were down on the future right after Katrina, and it showed in our surveys," said Gantz. "Then last month they more than doubled their spending outlook when users realized the economy was still perking along. This month they came back to earth. Small business executives were especially realistic."

FutureScan is a set of market metrics that measure supply and demand in the IT industry based on leading indicators and customer surveys. Values reflect expectations of future growth, with an index value of 1000 indicating zero growth and each additional 10 points representing roughly 1% of expected growth or contraction.

For January, Buyer Intent, which reflects market demand for IT products and services over the next 12 months, fell to 1047 from 1072 in December. The Market Indicators number, which combines input from economic and IT industry revenue forecasts, dropped from 1057 to 1051.

FutureScan results for January and prior months can be viewed at www.idc.com/futurescan.

- source: www.idc.com

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