Salaries of business school graduates are on the rise thanks in part to a revival of the banking and consulting industries, but the number of applicants to Harvard Business School (HBS) has been declining in recent years.

According to a report published by Bloomberg.com, a financial news website, the average compensation of June graduates of the HBS Master of Business Administration (MBA) program increased 11 percentage points to $174,580.

Increased job hires by firms such as PricewaterhouseCoopers LLP and Goldman Sachs Group Inc. are partially responsible for driving the rise in salaries. Business school class of 2005 hires at Goldman Sachs were awarded average base salaries of $115,000, a 35 percent increase from 2004.

Jonathan Jones, co-head of campus recruiting for Goldman Sachs says the company will continue to hire more MBA graduates. “Our MBA summer associate hiring numbers are continuing to grow, Our 2006 summer class will reflect a considerable increase over the 2004 and 2005 classes,” wrote Jones. “The increased appetite for MBAs is reflective of a stronger market for our Investment Banking division.”

HBS spokesman Jim Aisner also attributed the salary increase to the improving economy and a increase in the number of students seeking jobs with high paying hedge funds and venture capital firms.

According to a survey conducted by the Graduate Management Admission Council, the organization that administers the GMAT test, the mean base salary of MBA graduates nationwide increased by $10,000 to $88,626 from a year ago.

These reports of rising salaries come at a time when the number of applications to business school are decreasing. The number of applications to HBS has dropped steadily from 10,382 applications for the class of 2004 to 6,552 applications for the class of 2007.

Aisner attributed the decrease in applications to the fallout from the internet boom. “The number of applications received for 2004 was probably an aberration, it was the pent up demand after the internet boom so that is probably too high a watermark,” said Aisner. “Now we are seeing more of a return to normalcy with the number of applications being in the 6000-7000 range.”

The admission rate to Harvard Business School is 16 percent, according to the HBS website. Students pursuing a Harvard MBA degree pay $37,500 in tuition each year. When the cost of living and other fees are factored in, the cost is predicted to reach $66,110 per year.

The news of the salary increase had little effect on business school applicant Liqian Ma ’06. “Money did not factor in my decision to apply to business school,” he said.

According to Aisner, factors including challenges, mentors, and location all figure into a student’s decision to apply to business school. “When students who graduated from HBS were polled, salary was not the most important factor,” said Aisner. “It is very hard to say that there is a cause and effect relationship just by looking at salaries because there [are other]...issues that make people want to come here.”

Scott Stallings, associate director of student programs and advising at the Wharton School at the University of Pennsylvania, warned that the supposed salary increases of business school graduates can be deceptive. “The per student salary is not necessarily going up. Companies are hiring more MBAs commanding MBA salaries so the average salary is going up,” said Stallings. “The economy for banking has improved. Banking is back but I don’t think it will get any stronger this year.”