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IT spending growth dips

User IT expenditure growth in the UK dropped from 5.2% in the third quarter of 2005 to 3.9% in the fourth quarter according to a survey by Kew Associates.

User IT expenditure growth in the UK dropped from 5.2% in the third quarter of 2005 to 3.9% in the fourth quarter according to a survey by Kew Associates.

Kew says that this was the slowest quarterly increase in the past two and a half years and the deceleration is at odds with the slight acceleration in economic growth. However, with almost certain future revisions likely in the GDP numbers, Kew says that the Q4 divergence can not be viewed as definitive.

The extent of the fast growing small- to medium-sized enterprise (SME) market was revealed by an increase of 6.1% in SMEs' IT outlay in the last quarter of 2005. It remained unchanged from the previous quarter. In contrast, larger organisations’ IT expenditure increases nearly halved to 2.6% in the final quarter of 2005. This was the second slowest quarterly advancement in the last 10 years.

The Public Sector increased its IT expenditure outlay in Q4 2005 by 4.3%. This was down from 5.4% in the third quarter. However, the results exclude the contribution from the NHS National Program for IT. If the latter was included the public sector figure for the fourth quarter 2005 would be over 5%. The service sectors' growth rate dropped during Q4 2005 compared with the previous quarter. It fell to 3.7% from 5.1%.

Production industries’ IT expenditure growth also slipped during the fourth quarter of 2005. The increase was 4.0% compared with 5.5% in Q3.

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