Government Figures Give No Clear Sign Of Improvement In Economy

Aug 25, 2004 (07:08 AM EDT)

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Another government report on activity in the IT industry fails to give a clear sign whether the tech economy is improving or not.

The Commerce Department on Wednesday reported a seasonally adjusted 6.7% decline in orders for computers and related products last month. That follows a minute 0.1% increase in June. Shipment of computer wares rose 3.4% in July, reversing declines of 0.9% and 9.8% the previous two months.

In more recent economic recoveries, the IT manufacturing sector performed much better than all industries combined, providing a catalyst for an overall economy. Now, the difference is marginal; these days, IT more or less mirrors other industrial sectors. For instance, overall orders for durable goods--manufactured items designed to last three years or more--rose 1.7% in July, following a 1.1% increase in June. Year-to-year, durable goods orders rose 12.4%. By comparison, orders for computer products rose 13% this past year. Similarly, overall durable goods shipments rose 10.7% in the year ending July vs. a 14.3% increase for computer wares.

IT manufacturers appear to be quickly moving product through their warehouses. The number of unfilled orders fell 3% in July, as inventories increased only 1.7%. For the year, backlog in orders rose 0.8% and inventories rose 1.7%. That contrasts with a 9.7% annual increase in unfilled orders and a 3.7% rise in inventories for all durable goods.