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10/29/2004
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Growth Of IT Economy Modest At Best--Gov't Report

A Commerce Department report sees good news and bad news, amounting to a near stall over the last 12 months.

New government information shows a seesaw of good news and bad news for the IT industry. A Commerce Department report indicates that, overall, the industry has grown modestly at best over the last 12 months. The report dissects results for September and for the 12 months ending in September.

The good news in September was that orders of computer wares helped boost orders for all durable goods. But actual shipments of computer-related products fell during the month. Computers are one component of what the government calls durable goods--items designed to last at least three years.

The value of computer products that had been ordered--$35.6 billion--rose 3.9% compared with August's totals; the value of overall durable-goods orders inched ahead by 0.2%, the Commerce Department reports. September figures in the report are preliminary; those for August are revised.

But actual computer shipments fell 5.8%, to nearly $38.1 billion, compared with shipments of durable goods as a whole, which fell 1.2% in September.

For the year ended in September, orders for computers and related products rose by 10.1%, 2 percentage points lower than all durable-goods orders. It's unusual for IT-product orders to grow more slowly than all durable goods over 12 months. Yet, computer shipments for the past year increased by 11.4%, a half-percentage point better than overall shipments.

At the same time, however, computer wares are backing up in warehouses. Inventories rose 2.9% compared with the previous 12 months and unfilled orders jumped 7.2%. By contrast, overall inventories of durable goods grew 0.3%, and unfilled orders rose by 0.7%.

IT vendors aren't clearing their warehouses as fast as other sectors have over the past year. The value of computer inventories rose 7% over 12 months, while unfilled orders dropped 1.4%. As a comparison, the value of inventories of all durable goods in the past year rose by 6.3% and unfilled orders rose 9.6%.

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