COEUR d'ALENE - Kootenai County's unemployment rate fell to 10 percent in March - down from 10.6 percent in February - a sign that the local economy could be starting to heal.

The drop is largely due to manufacturing and retail businesses increasing production, said Alivia Body, regional economist, although the new rate is still worse than last year.

In March 2009, it was 8.5 percent.

"It's going down and that's definitely a good sign," Body said, adding that the rate has been falling since it peaked at 11.7 percent in January. "Hopefully we've hit bottom."

Idaho's statewide unemployment also fell in March.

It dropped a tenth of a percentage point to 9.4 percent, and recorded the first statewide decline in the jobless rate in 32 months, according to the Idaho Department of Labor.

Roger B. Madsen, Idaho Department of Labor director, said he sees the improvement as an indicator that Idaho's economy is on the way up.

"I'm very encouraged and optimistic." he said. "Six key economic indicators - labor force, new hires, total employment, unemployment, job gains, weekly benefit payouts - are all headed in the right direction."

Kootenai County's unemployment rate has typically outpaced the state's, as the lumber and service industries, two of North Idaho's specialties, were among the hardest hit during the recession, Body said.

March's 10 percent is still ahead of the state's 9.4 percent for the month. While Kootenai County's rate peaked at 11.7 percent in January, the state's 9.5 percent in February was the highest it has been since it hit 9.6 percent from December 1982 through February 1983.

But, Body said, Kootenai County's rate should continue to fall through the summer months, as seasonal employment, such as service industries and construction, will likely pick up.

"The fact that the retail sector is improving is a good sign," she said. "It means that the consumers are starting to regain confidence."

Katelyn Yount, 17-year-old Lake City High School student, was at the Department of Labor office on Ironwood Drive on Friday hoping to find a job for the summer.

She said the news about the service or retail jobs out there is a good thing.

"I really need one for the summer," she said. "I'd take anything."

Included in that jump were non-farm jobs, which increased by 4,600, only 1,100 short of the pre-recession average job increase between those months.

And major sectors like manufacturing, retail trade, restaurants and professional, business and financial services all posted gains above what was normal the past five years, the department said.

"Manufacturing and retail is looking good," Body said of the biggest local gainers. "And manufacturing is crucial to the economy because it's an export industry. The more we can export the more outside monies we're bringing in to the local economy."

Construction in Idaho, which shed 9,200 jobs between August and February, gained 200 jobs.

Job prospects have also improved, as The Conference Board, a business research group headquartered in New York, found there were seven unemployed Idaho workers for every two job listings in February, down from nearly 10 for every two listings last November, the department said.

"It's good news," said Jesse Kingsley, 26, looking for work at the Coeur d'Alene employment office.

Kingsley has been working temporary jobs since he was laid off three years ago.

"I need it," he said of the work. "I've been bouncing around with friends and stuff. I'm pretty much in between."

Nearly half the statewide job growth was in metropolitan Boise, according to the department, while only the greater Grangeville area had a higher unemployment percentage in the state than the Kootenai County area at 10.7 percent. Boise also came in at 10 percent for March.

The Burley area came in at the lowest at 6.8 percent.

The national rate remained unchanged for the third straight month at 9.7 percent.