NEW YORK -- Brokerage giant Merrill Lynch & Co. Inc. announced yesterday that it will return 8,500 employees to its buildings around Ground Zero. But it may not be quite the sign of rebirth that the company and the politicians are trumpeting.

The decision drew the praise of U.S. President George W. Bush, who gave a videotaped address suggesting that the return of Merrill Lynch workers was proof that New York's financial district was getting back on its feet after the Sept. 11 terrorist attacks that devastated Lower Manhattan and threw the New York economy into recession.

"I salute your compassion, your courage and your strength, and I'm pleased to help welcome you back home," President Bush said.

But missing from the company's press release is that there are actually fewer Merrill Lynch employees going back to the Ground Zero area than the number that worked there before. Prior to Sept. 11, a company spokesman confirmed yesterday, there were more than 9,000 employees in the World Financial Center, not the 8,500 who are going back to their desks.

The spokesman did not give precise numbers on how many Merrill Lynch employees may have moved out of other Manhattan offices, though he said those offices held only "hundreds."

"Hell no, not everyone is going back," said another Merrill Lynch insider, who spoke on the condition of anonymity. "After Sept. 11, there's going to be a lot less people going back to lower Manhattan. A lot of people are going to be based in New Jersey. There are more people headquartered in New Jersey than New York City."

And an expert on the Manhattan real estate market said payroll information from the government showed that the brokerage firm had approximately 16,000 workers spread around Manhattan. That would mean the brokerage firm is actually not returning as many as 7,500 jobs to the devastated economy of New York.

Company spokesman Guy McKanna said that number was too high, though he did say there were hundreds of other employees in Manhattan beyond the World Financial Center. He also said some of those jobs have disappeared because Merrill Lynch has laid off more than 10,000 employees globally owing to disappointing profit results.

Manhattan real estate brokers have warned in recent weeks that many companies are relocating to nearby New Jersey, largely because of lingering jitters among major corporations about returning to the former site of the World Trade Center, which was also hit by a terrorist bombing in 1993.

Why are so many companies anxious to show they are returning to Ground Zero? Part of the unusual pomp that Merrill Lynch drummed up around yesterday's announcement, which included New York Governor George Pataki saying it was proof "we are going to come back stronger than ever," may be the bottom line.

It is widely believed that Merrill Lynch wants to be the chief underwriter for bonds that New York State will soon be issuing, as much as $6-billion worth that could net Merrill Lynch at least $30-million in fees. To be one of the first to stage a comeback, to help shore up Wall Street's home, is good politics.

"It's a good time for Merrill Lynch to wrap itself in the flag," one source said. "They want to be the underwriter for the New York bonds."

The Merrill Lynch spokesman said that while he couldn't confirm that the company would be bidding for the business, it was likely they would be.

M. Myers Mermel, chief executive officer of Manhattan-based TenantWise.com, a respected watcher of the New York real estate market, said the return of Merrill Lynch was a symbolic act that may encourage others to follow suit. "It's a positive step, and we hope many others follow suit."

But the reverse seems to be happening. In its recent overview of the Manhattan real estate market, TenantWise.com concluded that prime office space has plummeted from $45 a square foot to about $30. Even with that relative bargain for companies, however, the Lower Manhattan vacancy rates are expected to soar from the current 15 per cent to at least 20 per cent by midsummer.

TenantWise, which has kept in touch with major firms in the financial district, also estimates that of the 138,000 jobs in Manhattan, almost 60,000 will be moving elsewhere. Of the jobs that are departing, 37,000 are destined for midtown Manhattan, while 15,700 will go to New Jersey, even though rents there are now higher.

Real estate observers in New York believe a "transformational" shift has been made in the psyche of corporate tenants, who represent the major economic base in Lower Manhattan.