US economy surprises with growth

Those industry analysts that wondered where the optimism expressed by Cisco CEO John Chambers in its most recent financial filing came from might understand more clearly after the US economy reported stronger than expected growth.

Figures for the second quarter showed that the US economy grew at 3.3%, higher than even government officials had expected.

The knock-on of the news should be to buoy up US based vendors and in turn provide a fillip for those determined to overcome customer concerns about a possible UK recession.

One of the signs that customers might not be so gloomy in outlook was a less aggressive move by companies to drop inventory levels.

Speaking to MicrosScope earlier this week from the US, Ed Stanley, director of technology at CoverterTechnology, said that it was continuing to see demand from enterprise customers despite the constant talk about recession and credit crunch.

“You can move a project but you cannot cancel it because most are large organisations that need to continue investing in IT to remain competitive,” he said.

In a question and answer document on the corporate website accompanying its final fiscal quarter of 2008 Cisco CEO John Chambers said that although the market was slowing, the company did not expect its growth plans for the next financial year to be knocked off course.

“If the market does continue to slow, we believe this will not dramatically change our long-term opportunities with our vision of how the industry will evolve and our differentiated strategy. As we head into the next fiscal year, we plan to aggressively invest in new and adjacent markets for the longer term, regardless of how long it takes for the macro environment to rebound,” he said.