The number of working Pennsylvanians reached an all-time high in May, and unemployment fell to its lowest level since 2001 -- two bits of good news that Gov. Ed Rendell touted yesterday as evidence of a "significant turnaround" in the state's economy.

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The governor boasted of the numbers during a news conference at Pittsburgh International Airport, where he sought to add to the momentum by handing out $101,000 in tax credits and a grant to LogicLibrary, a local software firm that has pledged to create 61 jobs the next three years.

The Station Square firm, which helps businesses to catalog the software they have, currently employs 30 and recently landed IBM as a client. Other clients include Northwest Airlines, Honeywell and Liberty Mutual.

"This is just the type of information technology company we need to grow throughout Pennsylvania," Rendell said, using the announcement and the latest state employment statistics to boast that a $2 billion economic stimulus package he pushed through the Legislature last year was paying dividends.

Critics contend that much of the activity would have occurred regardless and that while handing out incentives may help to retain and grow companies, using the money to lower taxes and finance needed infrastructure improvements would pay better dividends.

Whatever the merits of arguments from either side, it's clear that the state's economy is strengthening. The state's jobless rate fell to 4.8 percent in May, its lowest level since July 2001 and significantly below the national rate of 5.1 percent.

An additional 28,000 residents were added to the employment rolls last month, bringing the total employed in the state to 6 million, an all-time high, the state said.

A separate measure of employment hasn't been as positive.

After adjusting for seasonal factors such as summertime hiring, businesses added only 5,400 workers last month, a scant 0.1 percent increase -- matching the nation's anemic performance for the month. And over the 12 months, the state has added only 62,100 nonfarm jobs, a 1.1 percent increase that trailed the 1.5 percent rise nationally for the same period.

On a more positive note, manufacturers added 400 jobs in May, the first increase in 10 months.

Rendell conceded that there was still much work to do, and that while southwestern Pennsylvania counties have seen jobless rates fall, the region as a whole remains "a challenged area."

Rendell said the region's economy must become more diversified and that the state was still seeing too many high wage jobs being exchanged for low-wage jobs.

That's why companies such as LogicLibrary are the "wave of the future" for Pennsylvania, Rendell said. Not only do such companies help to retain or attract young people, they create the kind of well-paying jobs needed in the state.

LogicLibrary, founded in 2000, is expanding because of customer demand. Greg Coticchia, LogicLibrary president and chief executive officer, said the firm appreciated the support from the state and that Pennsylvania is becoming one of the nation's premiere technology centers.

Rendell said the improving economy should push the state's surplus to about $500 million, up from an earlier estimate of $350 million. But he said it would not result in tax cuts, noting that the extra cash was being eaten up by increases in Medicaid costs.