The US economy is in fine shape. It grew by around 3 per cent last year and should see an outcome exceeding 4 per cent for 2004.

Confidence is high from the consumer and business sectors. Housing starts are hitting record levels and the consumer is clipping along at around the 4 per cent mark.

Retail sales gathered momentum at the end of last year as US shoppers spent more time and money at the mall - about 7 per cent more than in 2002. But it gets better.

When we drill beneath the figures and look at what is actually shifting, there are some red-hot sectors in the US economy and technology is one of them.

Looking at the overall economy, the most recent data show that industrial production is moving ahead at just more than 2 per cent. However, when we focus on what parts of the manufacturing picture are really "getting busy", technology is the place to be. Production of computers and other office equipment is up 15 per cent on the year and grew at this pace and significantly higher for all of 2003. US companies are spending on technology in a significant way.

This goes a long way to explain the solid productivity growth rates the US continues to produce. The last reading on productivity growth in the business sector was in excess of 8 per cent.

So the "macro" numbers look good but the question is: is it showing up at the company level?

Company profits overall had a good year in 2003 - up by more than 15 per cent and ahead of analysts' expectations. Tech numbers were equally good and in the past two weeks we have the benefit of fresh readings of the pulse at the major IT companies in the US as they begin to release their numbers for the final quarter of 2003.

IBM's numbers hit the spot. For the final quarter of the year, its sales revenues were up 9 per cent compared to the same period in the previous year. A lot of this growth came from overseas but US sales were also respectable. IBM increased its earnings by 16 per cent over the previous year. It attributes a lot of its success to investments they made during the downturn.

Mr Sam Palmisano, chairman and chief executive, feels IBM entered 2004 with good momentum and that "the client buying environment is steadily improving".

There was also good news at Intel. Sales in the fourth quarter set a new record, surpassing levels last seen in 2000. Intel shipped a record number of units and grew its sales by 22 per cent in 2003. The company is looking for more double-digit growth in 2004.

Apple, which has greatly developed its product range over the past two years, also exceeded its revenue and profits targets in the last quarter of 2003. The company shipped 829,000 Macs in the last three months, up 12 per cent on its performance in 2002. Apple also sold 730,000 of its new iPods, which represents a growth rate of 235 per cent on the previous year. Apple, according to chief executive Mr Steve Jobs, is "kicking off 2004 with strong momentum".

Records are also being broken at Microsoft. Mr Bill Gates' company posted record sales of more than $10 billion (€8 billion) in the three months to December 2003. This is nearly 20 per cent higher than what it achieved in the same period last year. Microsoft products are benefiting from strong consumer and corporate demand for PCs, which, they say, continues to exceed their expectations.

The company estimates that demand for PCs is growing at a rate of 12 per cent while shipments of new servers are up 13 per cent. It also expects demand for their products to continue growing at double digits in 2004.

The latest batch of numbers also hints at better times for previously troubled stocks such as Motorola. The fourth quarter of 2003 was a period of improving order books across its entire range of products, and that growth ranged from 12 per cent to more than 60 per cent.

Motorola executives pointed to, what in their view is, clear evidence that top-line growth has returned to the technology and communications industry.

Company statements are still guarded and there is emphasis on the need to drive productivity and value across the product range. But there is no doubt that the current reporting season shows US tech companies, across a wide range of products, in better shape than they have been for some time.

Figures from Cisco, Dell and HP over the next few weeks should confirm this trend.

Investor confidence has more than matched this growing business confidence, as the moves in share prices over the past 12 months confirm.

US companies continue to invest in enhancing their productivity and their steadily improving cash flow is allowing them to do this. Tech firms continue to gear up their product range to meet that desire. The "technology winter" is over and certainly the near-term trends look positive - but neither in the customer nor provider space is there any sense of a return to "irrational exuberance".

There is a powerful recovery in global technology spending under way. Company newsflow over the next few months should attest to this.

This suggests a reasonable backdrop for technology stocks but, as the table above shows, share prices have moved a fair bit down that road already.

Eugene Kiernan is head of asset allocation in Irish Life Investment Managers