IT's economic recovery may have started

OECD reports signs that the bottom of the IT slump has been reached

Gloom may be lifting in the IT sector

Influential financial thinktank the Organisation for Economic Co-operation and Development (OECD) says it has detected signs that the bottom of the global slump has been reached in the IT sector.

In its latest report on the information economy, the OECD notes that while many IT vendors are gloomy about current prospects, there are some tentative indicators of improvement.

In its report entitled The Impact of the Crisis on ICTs and their Role in the Recovery, the OECD concludes that spending on IT hardware, software and services declined markedly in the first few months of 2009.

But May and June brought better news:

"There are signs of recovery, with the rate of decline bottoming out and turning up in the most recent cyclical data," it said.

Nevertheless, that recovery is based largely on vendors' cost-cutting measures, rather than increasing demand from users. Business confidence, especially in the financial services sector, remains fragile, said the report.

The OECD noted that the IT sector is particularly vulnerable to wider economic downturns, as both consumers and businesses are prone to cutting IT expenditure before other areas of expense.

But the organisation also confirmed that the long-term prospects for the IT sector remain good, as the internet economy will continue to grow over the coming years, while major government initiatives such as the development of smart transport systems and environmentally sound policies are reliant on IT investment.