Wall Street is recovering faster from the economic meltdown faster than anticipated, according to a report released by the New York State Comptroller’s office.

“Profitability is on track to exceed 2006 levels, which was a banner year for the industry,” Comptroller Thomas P. DiNapoli, said in a report released Tuesday. “Compensation is also increasing faster than expected, leading to expectations of higher bonuses.”

The report, citing figures from the Securities Industry and Financial Markets Association (SIFMA), stated that broker-dealer operations of the New York Stock Exchange’s member firms earned a record $35.7 billion in the first half of this year. That figure is more than one and half times the previous annual peak, the report said. In addition, net revenues totaled $91.4 billion in the first half of the year, compared to $35 billion for the same period a year ago.

DiNapoli’s office examined the pretax profits of four securities firms—Goldman Sachs, Merrill Lynch, Morgan Stanley and JPMorgan Chase (Bear Stearns)—and found that profitability improved at each. “Even Merrill Lynch, which lost more than $41 billion last year, reported a gain of $2.4 billion through the first nine months of 2009,” the report said. “These results helped improve the overall performance of their parent companies (i.e. bank holding companies) as other financial operations—such as consumer credit cards—are generating losses that are still holding down overall earnings.”

New York City’s securities industry lost 28,300 jobs as of September 2009, reflecting a 15% drop, the report stated.  “Job losses accelerated in the first half of 2009 before easing in the third quarter,” the report said. “Over the past three months, job losses have begun to slow and the industry even added 3,600 jobs in September 2009.” Outside of New York State, employment in the securities industry declined by 9.2% or nearly 61,000 jobs as of September 2009, the report added.

DiNapoli’s office predicted that job losses in the securities industry in New York City “are unlikely to exceed 35,000 reflecting the rapid improvement in the industry.”

As for compensation, the report noted that it has improved at the four largest investment firms that have their headquarters in New York City—Goldman Sachs, JPMorgan Chase, Merrill Lynch (now owned by Bank of America) and Morgan Stanley. The reports stated that both Goldman and JPMorgan Chase are “on track to pay out more compensation in 2009 than in 2007.” But compensation is still falling at Merrill and Morgan, “where the rate of decline has slowed since last year,” the report said.

In addition, bonuses, including deferred comp, paid to employees in the New York City securities industry “could be higher than last year based on current compensation trends,” the report said. “Compensation reform, however, will restrict the amount paid this year in cash and will increase the amount deferred to future years,” DiNapoli said in the report.