Job losses at US technology firms fell sharply in June, a study has found, raising hopes that the sector may be on the road to recovery.

Just 700 tech sector jobs were cut during June, the lowest monthly total in more than a year, the report from the American Electronics Association (AEA) said.

The pace of job losses hit a peak in the first half of 2001, when an estimated 437,000 technology workers were shown the door.

Analysts said the latest figures suggest that technology firms may be getting back on their feet after a two-year slump.

"The gut feeling among executives is that it's bottomed out. It's not going to be great, but the worst is over," AEA chief executive William Archey told the Reuters news agency.

Boom to bust

Technology firms prospered during the late 1990s boom as corporate America invested heavily in the latest computer and telecommunications equipment.

But consumers and companies alike reined in their spending as the global slowdown began to bite, forcing computer, telecoms and semiconductor firms to make savage cutbacks.

According to the AEA, the tech sector workforce fell from a peak of 5.7 million in March last year to just 5.3 million in June last year.

Regional hubs of the hi-tech industries such as northern California's Silicon Valley were hit particularly hard.

Uncertainty

Some analysts warned that it was too soon to call an end to the downturn.

"The economic outlook is weak and as long as it is I think firms will be cautious in two ways: one, they'll be hesitant to do any capital spending, and two, they'll be hesitant to hire," said Donald Straszheim of Straszheim Global Advisors.

The latest signals on the sector's economic health have been mixed.

Semiconductor giant Advanced Micro Devices (AMD) warned earlier this month that it would undershoot its sales targets, helping to push the Nasdaq index of hi-tech stocks to its lowest close in six years.

But last week, Craig Barrett, head of AMD's larger rival Intel, said he expected conditions for technology firms to improve early next year.