Unemployed Canadians continued to find work hard to come by in February as 2,800 jobs were lost across the country.

However, a surprising decline in the size of the labour force meant the unemployment rate fell to 7.4 per cent.

A consensus of economic forecasts had predicted overall growth of at least 15,000 new jobs in the month, with the jobless rate staying steady at 7.6 per cent.

Speaking to reporters at an event in Toronto, Prime Minister Stephen Harper said he was encouraged by some of the details of the jobs report, while being disappointed in the headline number.

"There are some positive elements that I think should not be ignored," he said. "The most important being that we are seeing a trend of the number of full-time jobs continue to increase."

Part-time jobs disappearing in favour of full-time jobs, Harper said, "gives us some reason for optimism going forward."

The number of Canadians looking for employment fell by nearly 38,000, all of whom were in Ontario. The drop in the participation rate — the percentage of people with jobs or looking for work — led to a decline in the unemployment rate, hiding an otherwise weak month for job creation.

Of the 38,000 who stopped looking for work, the majority were under the age of 25.

Employment among people aged 15 to 24 fell for the fifth month in a row, putting their unemployment rate at 14.7 per cent. As well, the participation rate among young people has fallen to 63.3 per cent from 68.1 per cent in September 2008.

A report from TD Economics released Thursday highlighted the trouble for youths seeking jobs, calling the recovery since the recession for them "non-existent".

'Just as the U.S. labour market finally appears to be turning the corner, Canada’s job market finds itself in a funk.'—BMO deputy chief economist Doug Porter 

BMO deputy chief economist Doug Porter says while this latest jobs report isn't as bad as it looks, it does show underlying weakness in the economy.

"Just as the U.S. labour market finally appears to be turning the corner, Canada’s job market finds itself in a funk," he said in an email.

"While this report isn’t as ugly as the headline dip in employment, the main message is that the domestic economy is now clearly struggling to post meaningful growth."

The job market seemed to be working for older job-hunters, but less so for younger ones. Among people 55 and over, employment rose by 24,000, mainly among men, Statistics Canada said. "Over the past 12 months, employment for this age group has grown 4.0 per cent, the highest rate of growth among all demographic groups."

"Compared with 12 months earlier, the number of full-time workers was up 1.5 per cent (204,000), while part-time employment declined 2.5 per cent (83,000)," Statistics Canada said in its release Friday morning.

United Steelworkers economist Erin Weir said that the weaker job market comes at a precarious time for governments.

"This labour force exodus comes as federal and provincial governments are finalizing their budgets," he said in a statement,

"The priority should be to create jobs through public investment and ensure adequate benefits for workers unemployed through no fault of their own."

Statistics Canada reported declines in retail and wholesale trade, transportation and warehousing, health care and social assistance, and public administration.

Those were offset by increases in finance, insurance, real estate and leasing, educational services, and business, building and other support services, the agency said.

Province by province, there was little employment change in February, except in New Brunswick, where 2,600 jobs were lost.

For those aged 25 to 54 across Canada, employment was unchanged.

Later Friday morning, the United States reported that the U.S. economy added 227,000 jobs, beating expectations, as the unemployment rate stayed flat at 8.3 per cent due to encouraged workers rejoining the work force.

An announcement Thursday that American unemployment claims rose last week has raised concerns that the economy might be stalling.