Monday, the Federal Reserve issued a preliminary report that says production of computer and office equipment rose 2.1% in February, far outpacing last month's total manufacturing increase of 0.7%. The numbers continue a trend. Manufacturers have boosted production of information technology and office equipment by 23.4% while overall production has risen just 2.7% since Feb. 2003.
Everyone remembers the last time we saw rapidly rising production of tech equipment. The expansion ended with a big, resounding pop. Back then, Silicon Valley friends told me stories of rows upon rows of unopened boxes sitting on loading docks. It was shortly thereafter that eBay
Are things any different now? Sure. For one, tech equipment makers are being conservative, running manufacturing plants at 67.3% of capacity, far lower than the 76.6% reported for the average American factory. In 1994 and 1995, before the bubble, tech factories peaked at 85.3% capacity. The lower utilization is a good sign. It shows that tech firms probably haven't gotten ahead of themselves.
Still, there's plenty of reason for tech firms to proceed carefully. In reporting quarterly results last week, Oracle
So, should you, the investor, shy away from technology stocks? Sure, if you don't know the businesses that support them. But if you are following the tech industry and have a good stock idea, don't let economic reports be a substitute for your own Foolish analysis.
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Motley Fool contributor Tim Beyers runs his refrigerator at 50% capacity. He's waiting for an uptick in global ice cream production. Tim owns none of the stocks mentioned in this story, and you can view his Fool profile here.
