TORONTO - Sluggish economic growth in the United States and uncertainty in Europe are largely to blame for Ontario's stagnating job numbers, Economic Development Minister Brad Duguid said Friday.

Ontario's unemployment rate fell 0.5 percentage points to 7.6 per cent in February, but that's largely because many people stopped looking for work, according to Statistics Canada.

It reported Friday that 37,900 Canadians stopped looking for jobs last month, almost all in Ontario.

The province lost 3,900 jobs last month -- a sign that European debt problems and America's slow growth are still affecting investment in Ontario, Duguid said.

"I think it's really important that we keep that in perspective because the fundamentals here are good for growth," he said, adding that the province created 121,300 net jobs last year.

"I'd like to see us off to a quicker start this year, but we'll keep investing in those fundamentals."

One of those investments is renewing a $90-million program to employ students aged 15 to 30 this summer, he said.

The program, which helped employ more than 130,000 young people last year, gives employers $2 per hour to provide summer jobs for up to 16 weeks, according to government officials. It also provides up to $3,000 for students who want to start their own summer business.

Labour force participation for 15- to 24-year-olds is now the lowest it's been since August 1999, according to Statistics Canada.

With the American economy "starting to come back" with two straight months of growth, things are looking up for Ontario considering that 77 per cent of its exports go south of the border, Duguid said.

That growth should open up new markets for Ontario products and create jobs, he predicted.

But some economists believe the job contraction is likely to continue.

"With the provincial government embarking on a period of austerity and with civil service cuts rumoured to be on the table, this trend is likely to persist," TD economist Sonya Gulati wrote in a note on the job numbers.

The governing Liberals, who are facing a $16-billion deficit this year, are promising to deliver a "big" budget before the end of March that will outline their plan to re-balance the books by 2017-18.

But the February numbers show that Liberal policies to create jobs by cutting corporate taxes and harmonizing sales taxes have failed, said NDP Leader Andrea Horwath.

"The government has been on the wrong track in terms of job creation," she said.

"They've done a lot of things to make the corporate sector more financially secure in terms of their cash reserves, meanwhile, everyday families are the ones feeling the brunt. It's their wages that are going down, their jobs that are being lost."

The Progressive Conservatives are blaming rising energy rates for the job decline, saying the Liberals' expensive foray into green energy is killing business.

Tory critic Monte McNaughton said one retail store in his riding of Lambton-Kent-Middlesex saw its hydro bill jump $8,000 in one year.

Ontario's businesses can thrive again if the government lowers the taxes they pay, reduces regulation and lowers energy costs, he said.

The Tories would scrap the expensive contracts to buy wind and solar power, he said. But McNaughton couldn't provide a guarantee that energy costs would go down under a Conservative government.

"Hydro will be affordable under a PC government," he said.