HARRISBURG -- Gov. Ed Rendell's $2 billion economic stimulus program is beginning to pay off, with 70,500 new jobs created last year, Community and Economic Development Secretary Dennis Yablonsky said yesterday.

The 1.2 percent increase in the number of jobs statewide in 2004 raised Pennsylvania to 27th nationally in job creation -- not great, Yablonsky conceded, but considerably better than 47th out of 50, where Pennsylvania had been.

His comments came the same day as the state reported that the jobless rate rose a notch in February to 5.2 percent, as both the number of employed Pennsylvanians and the labor force -- residents working or actively seeking jobs -- fell.

A separate measure of nonfarm jobs, such as those cited by Yablonsky, also shrank during the month, as businesses pared payrolls by some 2,300. The bulk of the drop-off occurred in the manufacturing sector, which is still struggling to overcome losses of the past few years.

State Labor and Industry Secretary Stephen M. Schmerin said yesterday that part of manufacturing's problem reflects its inability to find younger workers with the skills to replace older workers as they retire. He cited a study released last week by Duquesne University and local nonprofits that found the region's manufacturers were having trouble filling 2,500 job openings because applicants don't have the right skills.

"Regretfully, finding qualified workers with the necessary skills and training has become an increasingly difficult proposition for many businesses," Schmerin said. "In 1950, three out of four Pennsylvania jobs were classified as 'unskilled' and could be filled by someone with a high school degree or less. Today, only three out of 10 jobs are classified as unskilled."

Financing for the state's new stimulus program includes $1 billion in bonds, which will be sold over the next four years by the new Commonwealth Financing Authority, plus $700 million in state capital grants being given by Rendell for projects around the state and $200 million in funding for sewer and water projects.

One key program being run by the year-old CFA is a $300 million venture called Business in Our Sites, which aims to prepare polluted, former industrial land around the state for new uses. One reason Pennsylvania has lost many chances to lure new firms is the lack of "shovel ready sites," Yablonsky said, and this program is designed to correct that.