‘A game of two halves’ as the tech sector slowed in quarter

BUSINESS activity in the UK’s technology sector slowed down in the second quarter due to the impact of the General Election and uncertainties in the eurozone, according to the latest KPMG/Markit Tech Monitor UK survey.
By The Newsroom
Published 19th Aug 2015, 09:18 BST

The report, which tracks the performance, confidence and employment outlook of UK technology businesses, found that uncertainty at home and abroad had weighed on sales volumes and new business wins in the second quarter with business spending decisions delayed ahead of the General Election, while some firms also noted that the euro crisis had acted as a drag on confidence.

However, in the second quarter of 2015, the tech sector experienced growth in profits, with the index posting 54.3, up from 52.6 in the first quarter, to register the strongest rate of improvement since the end of 2014.

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Graham Pearce, KPMG’s head of the technology sector in the North, said: “The latest Tech Monitor report can be summarised effectively as a ‘game of two halves’. The second quarter of 2015 showed yet another quarter of solid growth but the overall momentum weakened from peaks seen in 2014.

“This reflected the impact of a number of uncertainties, most notably the General Election and euro area uncertainties.”

In terms of business activity, just over half (57 per cent) expect an increase over the year ahead and only six per cent forecast a decline.

As for job creation, almost half of the respondents (49 per cent) anticipate a rise in payroll numbers over the year ahead, indicating the strongest employment projections across the UK tech sector since this index began in October 2009.

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Mr Pearce said: “Happily, it looks like tech companies were just pressing the pause button, as our survey also shows that despite this Q2 slo wdown, tech companies are very upbeat about the future, forecasting an upturn in profitability, strong job hiring intentions and continued investment in capex.

“This is consistent with what I am hearing from tech companies, that business activity is coming back strongly post-election uncertainties and that there are tailwinds from benign economic conditions, increasing maturity of cloud solutions and customer needs to address their IT infrastructure as growth picks up.”

Related topics:KPMGNorth