U.S. jobless claims tumble

By Ros Krasny

CHICAGO (Reuters) - The number of Americans lining up for jobless benefits tumbled in the latest week, a decline seen as distorted by upheaval in the auto industry, while a key regional factory index slipped in July, reports showed on Thursday.

At the same time, U.S. home foreclosures raced to a record high in the first half of 2009, swamping efforts by the White House to remedy the spate of failing loans.

The day's reports highlighted the frailty of the U.S. economy at a time many forecasters see the nation poised to climb out of a deep recession that started in December 2007.

The Philadelphia Federal Reserve said its index of manufacturing conditions in the U.S. Mid-Atlantic region fell to minus 7.5 in July from June's unexpectedly strong reading of minus 2.2. Analysts had expected a slightly smaller decline this month.

"The number is still in line with the Fed's forecast at we saw in the FOMC minutes (Wednesday), that the economy is not as bad as it looked earlier this year, and that we could be near the end of the recession," said Gary Thayer, senior economist with Wells Fargo Advisors in St. Louis, Missouri.

Any reading below zero shows contraction in the business sector in a region that spans eastern Pennsylvania, southern New Jersey and Delaware.

The Philadelphia Federal Reserve report was consistent with views that the initial stages of recovery will be far from robust.

"This is going to be a bumpy ride for the next six months for the economy. We are going to have volatility in the data because they are not all going to all turn at the same time," said Kurt Karl, chief U.S. economist at Swiss Re in New York.