CORRECTED - Planes full, traffic down for U.S. airlines in July

(Removes incorrect mention of Delta in second paragaph)

* Airline traffic mostly down in July

* Load factors mostly up

CHICAGO, Aug 6 (Reuters) - U.S. airlines sold fewer seats but flew fuller planes in July as the economic recession continued to nibble at travel demand.

Monthly data released by the carriers this week showed that most of the top nine airlines cut capacity year over year, with JetBlue (JBLU.O) being the only exception.

Load factors, a measure of how full an airplane is, were mostly higher. [nN06505939]

The airline industry has been hit hard by a drop in demand as the economic recession takes a toll on travel budgets. But airlines are starting to see signs of improvement.

"We finished July with strong close-in bookings and remain cautiously optimistic about the demand environment as we enter the fall season," US Airways Group (LCC.N) President Scott Kirby said in a statement.

Traffic for US Airways fell 4.3 percent, while capacity dipped 5.7 percent. The carrier reported a load factor of 86.4 percent, up 1.3 percentage points from a year ago. (Reporting by Kyle Peterson, editing by Maureen Bavdek)