While 2003 wassn't looking as bad as last year for the tech economy, the idea that this could be a "recovery year" may be far fetched, according to a US study released by analysts, The Goldman Sachs Group.
In a study of reported corporate capital expenditures in 2001 and 2002 and the projected expenditures for 2003 of 752 companies spanning 53 business sectors, the firm predicted that there would be an overall decline of 10 per cent in capital expenditures this year. That would come on top of a 15 per cent decline last year.
While that wax a small improvement, cutbacks continued, according to the study, which was carried by Goldman Sachs Global Equity Research's Americas investment research department.
The report concluded that the direction of IT spending would "remain on the downside" through the year.
The study doesn't include all IT spending sources - including the commercial banking sector or government IT spending - so it doesn't cover the entire tech economy. And it is limited to the mainly US companies that are covered by New York-based Goldman Sachs.
"This message remains consistent with our view that companies continue to tighten what are in many cases already anemic capital budgets," the report said.
While adjustments could take place within companies "the magnitude of cutbacks already in place seems to support what could be another disappointing year for IT spending."
In the financial services market, the largest for IT spending, a small increase of 4 per cent was expected for 2003, according to the study. This would compare with a 25 per cent decline last year.
In the communications market, IT spending was expected to "retreat from steep declines in 2002, but [Goldman Sachs] still expects spending to be down 12 per cent."
In manufacturing, IT spending was projected to increase overall by 5 per cent, compared with last year's drop of 16 per cent. And in the IT market itself, IT spending was projected to fall 5 per cent, compared with a hefty 33 per cent decline in 2002.