IT Unemployment Dip Seen As Economic BellwetherIT Unemployment Dip Seen As Economic Bellwether

After seven months of increases, the IT unemployment rate fell last month by more than a percentage point, raising hope that the record levels of out-of-work technology workers is over.

IT unemployment dipped to 4.4% in December, down from a record high of 5.5% in November. Still, December's IT unemployment rate was more than double the 2% rate in December 2000. For the entire job market, unemployment in December reached a 5-1/2-year high of 5.8%, according to the Bureau of Labor Statistics.

There are signs of an IT employment turnaround. Bank One Corp. last month said it will hire 600 IT workers in the next few months. Nationwide Insurance Co. also plans to increase its IT workforce. Dice.com, an online employment service, says postings by employers for IT workers blipped upward this past week for the first time since last spring.

Last year, IT unemployment bottomed out at 1.9% in April, then jumped to 5% in August through October before vaulting to 5.5% in November.

The IT unemployment rate comes from statistics culled by information from household surveys that the Bureau of Labor Statistics conducts each month, and reflects three categories of IT related occupations: computer systems analysts and scientists, computer programmers, and computer operators.

Economists caution people not to read too much into one month's numbers, but say IT employment should lead other job categories when the economic recovery arrives. "Unquestionably, the sector is still in a rapid growth phase in the long run," says David Levy, chairman of the economic consulting firm Jerome Levy Forecasting Center. "Anything that grows rapidly can get ahead of demand," he says of IT employment. "It may overshoot, resulting in a nasty correction. But it will trend upward again."

While Levy believes the recovery is months away, others see the improved unemployment figures as a recovery indicator, with increased IT purchases leading to IT hirings. "When the recovery comes, it will be technology driven," says Wells Fargo senior economist Scott Anderson. "We've already seen new orders for computer hardware and semiconductors. Technology has been the weak link, but it will be the first place where growth bounces back."