The survey released by the Information Technology Association of America was the first of its kind, but used historical data to provide a baseline and trends after the low point of the recession in 2002.

Based on the survey, the index rose 3.9 points in the third quarter to 121.6, which nearly matches a three-year high of 122.3 in the fourth quarter of 2004.

ITAA president Harris Miller said the group decided to establish the index "because there was an overreaction when there was a recession, and there were a lot of articles about the end of tech."

"People were thinking that not only did the Internet bubble burst but the tech industry was going away," he added. "I think its fair to say tech is back, but it's older and wiser and in many ways more important to the US economy."

The report compiled by Forrester Research was based on 11 measures of IT demand, supply, and the strength of US-based IT providers, including employment.

It found that IT employment continued to rise, reaching its highest level since early 2003 with the addition of 15,500 new jobs.

Prices declined in the past quarter, and Forrester analysts said they expected prices to show continuing declines as technology improves.

"The Forrester/ITAA US Tech Sector Index provides not only a detailed look at the current health of the tech economy, but also a look at what's ahead," said George Colony, chairman and CEO of Forrester Research.

"The index reveals a continuing saw-toothed pattern, which further supports Forrester's findings that the tech economy is not yet in a period of strong steady growth.

In the near term, the new data points to both moderate increases and declines over the coming year. Don't weep for the US tech sector, but don't break out the champagne either. Save it for 2008."

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