U.S. leading economic indicators rise in July

WASHINGTON (Reuters) - A gauge of future U.S. economic activity improved in July on an a drop in new claims for jobless benefits and an increase in housing permits, although the reading still pointed to sluggish growth ahead.

The Conference Board said on Friday its Leading Economic Index climbed 0.4 percent to 95.8, reversing a 0.4 percent decline in June.

Analysts surveyed by Reuters had forecast the index would rise 0.2 percent in July.

Fewer jobless claims last month was the biggest driver in the increase of the index, the Conference Board said. Also, building permits jumped during the month, which could point to more construction down the road.

Strong retail sales during July has boosted the view that economic growth will pick up in the second half of the year but remain lackluster. Growth and hiring were disappointing in the spring, boosting expectations the Federal Reserve could unleash more economic stimulus.

"The indicators point to slow growth through the end of 2012," said Ken Goldstein, an economist at the Conference Board.

"However, back-to-school sales are better than expected, suggesting that the consumer is starting to come back," he said.

(Reporting by Jason Lange; Editing by Neil Stempleman)