Recession fears will “slow down” IT spending in Canada, U.S.

Twenty-three percent of respondents to a ChangeWave Research study said their companies will reduce or halt IT spending in the second quarter of this year, results that underscore recent concerns about a U.S. recession.

ChangeWave, an investment advice firm in Rockville, Maryland, conducted a survey Feb. 11 to Feb. 15, garnering responses from 2,013 people involved with IT spending in their organizations. Most worked for U.S. companies, with 7 percent of respondents coming from Canada, as well as a small number from other nations.

Only 15 percent of respondents said spending would increase in the second quarter, a nine-point drop from the company’s previous survey in November. Just 10 percent reported that first-quarter spending has been greater than planned, a fall of seven points compared to the last survey. Twenty-seven percent of respondents said their companies have spent less than planned during the first quarter, a rise of three points.

Meanwhile, 43 percent said their companies are giving a “green light” to second-quarter spending, meaning conditions are normal. But that represents a nine-point drop from the last study and the lowest level ChangeWave has seen in more than four years.

The results are roughly similar across companies of all sizes, according to ChangeWave’s data.

“This is pretty non-ambiguous stuff here,” Paul Carton, director of research for ChangeWave, said of the results. “But it’s not the end of the world, either. … We’re having a tough quarter right now. Spending is down. That doesn’t mean there aren’t pockets where things are doing OK.”

In addition, strong consumer spending could prop up the economy even as corporations tighten their belts, he said. “We find in our world of measuring change, the consumer spending is two-thirds and corporate spending is one-third.”

However, a ChangeWave study on consumer spending from January turned up similarly grim results.

Also, respondents to the latest survey offered rather lukewarm forecasts for the rest of the year. Only 19 percent said they expected their IT budget to grow in the second half of 2008, and 20 percent predicted it will drop. However, 51 percent said they believe it will remain the same.

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Jim Love, Chief Content Officer, IT World Canada

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