Jan 30, 2009

C A P E X crisis = IT vendor crisis

As we said before... this is a CAPEX crisis......

From the Wall Street Journal today-"Companies are pulling back on capital investment (capex crisis) as they pare their work forces and brace for a weak year, damping prospects for a rebound in economic growth anytime soon. Orders for big-ticket manufactured goods such as machinery, metals and computer equipment slumped in December for the fifth month in a row, the Commerce Department said Thursday, a sign that businesses are holding off on investment in the face of weak demand and losses from the final months of 2008."- 

A wide range of industries saw a drop in new orders last month, including computers and software.  But a gauge of future business spending -- orders for nondefense, nonaircraft goods -- tanked at the end of the year, falling 2.8% in December from the previous month, in an ominous sign for spending in 2009.

The drop in business investment is a key reason U.S. economic output, which contracted at an estimated 5% to 6% annual rate in the fourth quarter, is expected to shrink by a similar amount in the first three months of this year.

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