Microsoft sales have slowed sharply as customers facing economic strains cut their spending on technology.

The firm said sales rose just 2% in the three months to December, to $52.7bn (£42.7bn), the smallest quarterly increase in more than six years.

The update came just days after the firm said it would reduce its workforce by roughly 5%, eliminating 10,000 jobs.

The tech industry has been hammered by job cuts in recent months, as advertising and other spending slows.

Businesses are worried about the economy, while households that splashed out on computers and other tech while stuck at home during the pandemic have been cutting back, especially as the cost of living rises.

Microsoft said revenue tied to the Xbox video game system fell 12%, while spending on its Windows products plunged 39%.

Sales growth in the firm’s Azure cloud computing unit – seen by analysts as a key growth driver for the firm – was better than expected, up 31%, helping to lift the firm’s shares in after-hours trade.

But overall profits sank 12% to $16.4bn.

Prior to the update from the company, Wedbush Securities analyst Dan Ives wrote in a note that he thought the slowdown for Microsoft would be temporary.

“Our recent conversations with customers and partners underscores our confidence that [Microsoft] can ride out this economic storm and ultimately be in a stronger position in the other side with cost cutting and strategic measures already in place,” he said.