Downers Grove, Ill. — May 7
Improving economic fundamentals and solid customer demand for IT products and services helped boost positive sentiments in the latest CompTIA IT Industry Business Confidence Index.
The Business Confidence Index — a quarterly survey from the nonprofit association for the IT industry — recorded a gain of 4.6 points to 56.7 on a 100-point scale during Q2. The index — an aggregation of opinions on the U.S. economy, the IT industry and one’s company — is now at its highest level in more than a year. The index for Q2 2012 is based on an April online survey of IT industry executives and professionals. A total of 433 IT companies participated in the survey.
Looking ahead, IT industry executives expect momentum to continue, leading to incremental gains in the index and the potential to push sentiment further into positive territory in 2012.
The U.S. economy component of the index increased 5.5 points from Q1 to Q2 and is projected to increase another 6.6 points during the next six months. The economy rating has been an ongoing drag on overall sentiment for many quarters.
“Compared to other economic recoveries, this one still leaves a lot to be desired,” said Tim Herbert, vice president of research at CompTIA. “Progress in some areas has been slow, but we’re finally seeing signs of renewed stability. The IT sector continues to be an important player in driving economic and job growth.”
Net positive sentiments for all three components of the index increased in Q2. For the U.S. economy, net positive sentiment improved by 11 percentage points, to 21 percent. The IT industry is up 12 points to 66 percent net positive. Company sentiment improved by 6 percentage points to 68 percent.
Several factors may have contributed to the somewhat favorable feelings about the economy: consumers getting their debt situation under better control; modest improvements in the housing market; growing cash reserves held by many businesses; and an unemployment rate that continues to slowly decline.
That said, businesses have seen this pattern before, where a rebound in confidence doesn’t quite take hold and the economy takes a step back into a period of volatility and paralysis, Herbert said. While many threats to growth have subsided, other factors could still potentially derail or minimize growth.
IT industry executives are especially concerned about downward pressure on margins, weak customer demand, unexpected economic shocks and government regulation.
Technology Critical to Business Success
Another factor that may be contributing to the IT industry’s positive outlook is the role technology plays in economic growth.
“Businesses of all sizes continue to cite technology as increasingly important to their success,” Herbert said. “Consequently, IT firms that can deliver on the promise of technology-driven solutions are finding plenty of opportunities.”
As such, 43 percent of IT firms in the CompTIA survey plan to increase their level of investment in new products and business lines during the next six months. Additionally, 42 percent plan to increase investment in their technology, such as building out a cloud data center or upgrading a professional service automation solution.