The technology industry's embryonic recovery is entering its most critical period, with the outlook finely balanced between a continued rebound and stagnation, according to two corporate spending surveys released yesterday.

Results of separate research carried out by Goldman Sachs and Gartner showed that, while the industry's three-year slide appeared to have come to an end, the much-anticipated upturn in IT spending was still more predicted than real.

Gartner, which carries out a monthly review of IT demand, said that in August companies had only spent 81 per cent of the money they had budgeted for IT. That is a sharp slowdown from readings of above 90 per cent since May, said Mr Martin Reynolds, a Gartner researcher, and was a "dark cloud" just as it seemed that demand was picking up.

The final three months of the year typically bring a bounce for the tech industry, thanks to a "budget flush" as corporate chief information officers spend unused parts of their annual budgets.

This year, in particular, Wall Street has anticipated a robust bounce in the final quarter as companies regain confidence in their own businesses and make up for some of the drought in IT spending of the past three years.

Goldman Sachs, meanwhile, reported a slight deterioration in the spending outlook since its last survey, although it said prospects for next year remained very evenly balanced.

Reports from the bank earlier this year revealed a sudden drop in likely IT demand as a result of the Iraq war, followed by a marked rebound in confidence. - (Financial Times Service)