Jobless claims by US workers jumped another 2.4 million last week, the government said Thursday, the same day that analyst firm IDC said business confidence by US IT buyers continues to plunge.
Total US jobless claims in nine weeks have exceeded 38 million just as many companies begin to bring workers back to offices and plants following weeks of shutdowns and work from home orders due to COVID-19.
IDC has been regularly tracking IT spending indicators bolstered by surveys of IT executives. The company noted Thursday that spending declines appear to be stabilizing and even bottoming out in many countries, but not the US.
On average,100 US firms surveyed recently said their IT spending will drop by 7% in 2020, two percentage points below their prediction of early May. And 90% of US firms now think that GDP will be 5% lower than original forecasts for 2020, up from 42% who said so in the early May survey.
Also, 36% of US firms now think the COVID-19 outbreak will last for more than 12 months, up from 22% who said so in early May.
“While confidence levels have stabilized in Asia/Pacific and Europe, they continue to plunge in the US where businesses now expect even deeper cuts to IT budgets this year than in the previous survey two weeks ago,” IDC said in a statement.
“Many companies remain confused by conflicting signals and are worried about a second wave of infections if lockdown measures are not eased carefully, while others remain concerned that the pace of ending restrictions is too slow,” IDC added.
IDC analyst Stephen Minton added, “US firms are still very confused, and the lack of business visibility is putting pressure on short-term IT planning. Whatever your opinion about the pace of ending economic restrictions, and hat this will mean for a possible second wave of infections, what we all know is that a lack of visibility isn’t good for IT spending or business planning in general.”
“While there is a sense of things bottoming out for now in other parts of the world, we have not yet reached a similar broad consensus in the US,” Minton said.
IDC has created a COVID-19 tech index that is based on a 1000-point scale, where scoring above 1000 indicates growth and below 1000 indicates a decline in IT spending. The global index dropped below 1000 in early April and reached 962 midway through May, just slightly below the 964 score of early May. The May scores were an indication of “bottoming out for now for most countries” with IDC indicating the next phase will be either the start of a global recovery or a second COVID-19 wave crisis.
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