It may be too early for promises of an upturn in the IT market, but the latest quarterly bulletin from skills body e-skills UK suggests the sector is unlikely to get worse.

Although the overall number of IT staff redundancies rose slightly in the second quarter of 2003, from 10,000 to 12,000, unemployment rates among technology professionals actually fell slightly.

Salary cuts also appear to have ended, much to the relief of both contract and permanent staff, some of whom had seen their pay drop by up to 20 per cent.

The average permanent salary for IT staff currently stands at around £36,000 per annum, with IT managers taking home an average £51,000 per year, compared to average annual salaries of £24,000 for PC support professionals.

The average hourly rate for contractors stands at £33 per hour, equivalent to a salary of £61,000.

The research also reported an improving performance on IT shares and a stable, if not declining, incidence of company closures among IT firms.

Terry Watts, chief operating officer at e-skills UK, told vnunet.com: "It's better news. The signs are that things aren't bad as they were. One of the key indicators is the FTSE index of IT companies, which shows a positive trend."

Demand for a number of technical skill sets, in particular .Net and C#, are also showing positive signs of taking off.

Meanwhile, attempts by e-skills UK to promote IT careers continue, but Watts said a lack of knowledge among school careers advisors about working in IT was an ongoing problem.

"Recent bad news about the sector hasn't done it any favours," he added.

Industry analysts are predicting a flat market for the rest of the year, followed by small-scale growth in 2004.

Analyst AMR Research is suggesting a two per cent increase in IT budgets in 2004, while rival Ovum anticipates similar growth of between two and three per cent in line with changes in gross domestic product.