COEUR d'ALENE - The Idaho Department of Labor on Friday said workers saw an increase in earnings during the first three months of 2010.

Economists weren't surprised, and believe it's a sign the state's economy might have started to recover.

Alivia Body, regional labor economist for the department in Coeur d'Alene, said, "It doesn't really surprise me because of all the activity that's been happening in Kootenai County."

Manufacturing companies here have seen an increase in backlogs and profit, she said. She pointed to Ground Force Manufacturing, LA Aluminum Casting Corp., and Idaho Forest Group, among others. General building contractors have won some large contracts lately, she said.

Still, she said, "It's going to be a slow and bumpy road ahead. There will be slow growth."

Wages and salaries slipped for six straight previous quarters.

Michael King, a financial consultant for D.A. Davidson in Coeur d'Alene, said, "What I'm seeing is people getting creative in their job search and in their business endeavors. Recessions often provide an incentive for people to reinvent themselves, go back to school, or to pursue a business idea they have had, but not acted on."

The department said Idaho's estimated total first quarter personal income was more than $49.7 billion. The state got the numbers from the U.S. Bureau of Economic Analysis.

The personal income number in Idaho is up 1.3 percent from the final quarter of last year, and it's the second quarter in a row that total personal income has gone up. The 0.7 percent increase from the third to fourth quarters in 2009 was due solely to higher business profits and increased investment earnings, the department said.

Body said the regional breakdown within the state is not yet available.

Per capita personal income in Kootenai County rose 0.9 percent from 2007 to 2008, which was higher than the state percentage increase during that period, Body said. Those are the most current numbers for the county, she said.

The business profits for some is a good sign, and will spill over into other industries, she said.

Idaho's increase was slightly higher than the nationwide increase and ranked 10th among the states. New Mexico was the only western state to post a higher gain.

Wages and salaries paid to Idaho workers were up eight-tenths of a percent, rising to $22.7 billion from $22.5 billion on an annualized basis. That essentially matched the wage and salary total for the April-June quarter in 2009, but was below the record total of $24.4 billion in the final three months of 2007.

Business profits, which rose nearly 5 percent in the fourth quarter of 2009, were up another 6 percent in the first quarter this year. Combined, profits and wages accounted for nearly $500 million of the $650 million hike in total personal income.

King said, "The higher business profits are a result of companies cutting costs to the bone, including eliminating a lot of people's jobs."

Eventually, he said, "It should get to the point where the employees who are still around will have more in their inbox than they can manage, and companies will stop paying overtime and start hiring."

Investment earnings slipped in the fourth quarter by $69 million while transfer payments - Social Security, pensions, insurance benefits and similar payments - rose 2.5 percent, about $238 million.

Statewide in Idaho, the major contributors to the boost in wages and salaries were health care, manufacturing, natural resources and administrative and support services. Construction posted a decline for the ninth straight quarter. Most other sectors of the economy showed fractional growth.

King said, "Stimulus in the form of tax credits has helped the real estate markets which trickles down to the mortgage companies, title companies, lawyers and construction."

He said this has ended and likely pulled some demand from the future quarters.

"Health care and natural resources both played a big part in wage and salary growth in Idaho, and both industries employ a large number of people in Kootenai County," King said.