Revenue sales growth through European IT distribution is now forecast
to decline by -3.3% for the full year 2023 due to a downwards revision
in all sectors, according to our latest global market intelligence.
We had originally predicted a 1.6% growth in revenue across the
region in 2023, but declining business confidence and delays to
commercial sector projects have revealed a slowdown in growth driven
by persistent inflation.
While unit sales have been declining in core hardware categories
since 2022, for the first time in the Covid and post-Covid era, this
Q2 2023 fall (of -12% overall in units) was not offset by an increase
in average selling prices (ASPs), which reduced overall by -1%.
As a result, we now forecast quarterly revenue growth of -7.1% for
distribution sales in Q3 2023, with succeeding quarters growing at
-0.6%, 2.5% and 6.5%.
While value will continue to drive growth this year, as it did in
2022, thanks to IT infrastructure projects (especially networking),
software sales and government investment in health and education,
supported by the NextGenerationEU programme, it will grow at a lower
level than in previous years. This is due in part to higher inflation
and living costs, and increased economic uncertainty which has
depressed business demand. We have accordingly reduced the full-year
value forecast from 8% to 6%.
From a macro-economic perspective, inflation is coming down in the US
and euro area. However, Germany's important industrial sector is
slowing and consumer and business sentiment remains clouded. Consumer
confidence, whilst growing in the EU27 area, is at an all-time low
compared to the past 10 years, while business confidence has been
declining since January 2022.
It seems that businesses are delaying projects, not cancelling them
altogether. In fact, fears of recession are easing, inflation is
coming down and GDP forecasts have been nudged upwards since May. The
IT industry will feel understandably frustrated by this temporary
slowdown in growth. From Q4 2024 the comparatives will improve and
bring the industry back into positive growth.
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