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Ed Frauenheim

Staff Writer, CNET

Techies have reason to feel bullish about the job market, a new report from investment firm Merrill Lynch says.

Chief information officers in the United States and Europe plan to increase their information technology staff rosters next year, according to the report, which was released Tuesday. Of the 75 U.S. and 25 European CIOs surveyed, 47 percent said their IT staffing will be up in 2005. Another 44 percent expected flat IT staffing, while 9 percent said it would be down.

The report comes in the wake of mixed signals about the job climate for technology professionals, who weathered massive job cuts earlier this decade. Online ads for tech jobs have increased, IT services companies have been hiring, and analysts are warning companies to take steps to retain prized workers as the job market tightens.

In addition, the unemployment rate for employees in computer and math occupations has dropped to an average of 4.5 percent for the first three quarters of this year from an average of 5.6 percent during the first three quarters of 2003, according to U.S. Department of Labor data.

But the average number of people employed in computer and math occupations during the first three quarters of this year slipped to about 3 million, down 7,000 from the same period in 2003. That, coupled with the lower unemployment rate, suggests that some techies left the field, possibly discouraged by grim job prospects. In addition, technology professionals face the threat of so-called offshoring–-in which high-skilled work is sent to lower-wage countries.

Another study released Tuesday suggested CIOs will have reason to bring on new employees in the future. Worldwide spending on information and communications technology is expected to grow about 8 percent a year from 2003 through 2007, a faster pace than global economic growth, according to the World Information Technology and Services Alliance.

Information and communications technology spending in the United States is also growing, with a projected compound annual growth rate of 6.8 percent per year from 2003 through 2007, outpacing projected growth of the U.S. economy during that period by 1.2 percent, according to the alliance. The United States will continue to spend the most on information and communications technology, reaching roughly $1.3 trillion in 2007, said the alliance, a consortium of IT industry associations from 65 economies around the world.