The latest findings from the iProfile Skills Survey has found contractors reported their second consecutive rise in hourly rates per hour during the second to third quarter period of this year.

And recruiters report this slight uplift in salary expectations is being driven development projects, which are continuing to lead demand for more specialist programming and integration skills, overtaking demand for Java expertise.

Lisa Kwiecinska, Recruitment Zone operations director said: “The third quarter of 2006 has seen a significant increase in both permanent and contract opportunities across all sectors involved in IT. Skills such as C# and general .Net technologies have emerged as front runners for most development focused projects over during this period, whilst it seems that Java is slowly slipping back down the priority list for many companies.”

The survey, commissioned by IT professional body, ATSCo and produced by recruitment firm SkillsMarket, did also reveal the median salaries of permanent staff fell slightly. But positive changes in annual earnings were, however, reported for a number of permanent IT roles. And looking longer term, pay for permanent IT staff appears to be following a generally upward trend.

Ann Swain, chief executive of the Association of Technology Staffing Companies (ATSCo) said: "There has been little change in the IT market over the last quarter with demand for both contract and permanent IT staff continuing to increase in line with our improving economy. Finding good candidates is becoming increasingly difficult, especially those with niche skills, as they can now afford to be more selective about the jobs they apply for. ATSCo expect this upward trend in the IT market to continue into next year."

Stephanie Elliott, managing director of recruitment company Volt Europe, said: “We have seen a substantial increase in the demand for both permanent and contract staff during Q3 2006, which we estimate to be around 15%. Pay rates of both permanent and contract staff have also increased (possibly as a result of the increase in demand) by about 5%.

Elliott also confirmed that specific skills contributed to the increase in demand, including banking applications and development languages. “Demand is buoyant in specific industry sectors,” she said. “For example the recruitment spend at a client in the financial industry has increased by 100% compared to 2005 and they expect the trend to continue for the first half of 2007. We expect the demand for IT staff to continue to increase in the short term by about 5%.”