GE Capital forecasts increased IT investment

Research from GE Capital is forecasting an increase in IT investment towards the end of this year, with cloud services business models outperforming traditional infrastructure.

The Purchasing Managers’ Index (PMI), which is a measure of near-term business optimism and is highly correlated with orders for new computer equipment, continued to strengthen in October according to GE Capital’s Technology & Business Services Industry Research Update for November 2014.

The October PMI of 59, which was up 1.9 points compared to September, was the 17th consecutive month that the index indicated expansion in the manufacturing sector. Similarly, new orders for computer equipment have increased year-over-year during 10 of the past 13 months through September.

Following a very strong showing during Q2, overall investment in IT and related assets slowed significantly during Q3. However, rather than core IT equipment (servers, PCs) and software, all of the weakness was attributable to “non-core” categories such as communications equipment, office imaging, and medical equipment.

Global demand for PCs, high-end laptops and on-site servers is slowing in favour of tablets, low-end laptops, smartphones and the cloud. In contrast annualized growth in software spending remains positive and continues to outperform overall IT spending, GE said.

GE Capital’s Telecom, Media and Technology (TMT) financing business completed a combined total of 59 deals worth $5.5 billion during 2013.