By Leah Schnurr and Andy Bruce
NEW YORK/LONDON (Reuters) - An improvement in the U.S. employment picture last week and a rise in regional factory activity suggested an emerging divide between resiliency in the U.S. economy and faltering growth in Europe and Asia.
Even so, overall factory data in the United States on Thursday was mixed as industrial output declined in November for the first time in seven months. As a whole, the day's data pointed to a U.S. economy that is improving but not off to the races.
U.S. weekly claims for jobless benefits fell to a 3-1/2-year low on Thursday, and factory activity in much of the country's Northeast picked up this month, suggesting an emerging divide from gloomy economic trends in Europe and Asia.
The better-than-expected U.S. data boosted optimism the economy has momentum heading into the new year and was further evidence it is, so far, weathering the festering sovereign debt crisis in Europe, which is starting to crimp growth in emerging trade partners like China.
The number of Americans filing new claims for jobless benefits dropped by 19,000 to a seasonally adjusted 366,000 last week, the lowest level since May 2008.
As well, two factory activity surveys for the U.S. Northeast showed growth accelerated as new orders improved, and manufacturers were more optimistic about the months ahead.
While the pace of decline in the euro zone's business economy unexpectedly slowed in December, surveys earlier on Thursday confirmed the region is almost certainly stuck in recession.
That leaves the United States as perhaps the only major Western power currently making a significant contribution to global economic growth.
"It seems the U.S. economy is continuing to improve and is finishing the year on a very strong note," said Alex Hoder, economic analyst at FTN Financial in New York.
The U.S. data helped boost Wall Street stocks in early trading.
The New York Federal Reserve's "Empire State" general business conditions index rose to a seven-month high at 9.53 from 0.61 the previous month.
The Philadelphia Federal Reserve Bank said its business activity index jumped to 10.3 from 3.6 the previous month, rising to its highest level since April. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware, while the Empire State data covers New York state.
But production in the U.S. industrial sector eased 0.2 percent last month, the first drop since April, following a 0.7 percent gain in October.
In the euro zone, Markit's flash composite purchasing managers' index (PMI), which corresponds closely with economic growth, rose unexpectedly in December to 47.9 from 47.0 last month.
But it has now lingered for four months below the 50 line that divides growth from contraction.
"(It) reinforces the notion that the euro zone economy is slipping into a mild recession rather than falling off a cliff," said Martin van Vliet, senior economist at ING.
The survey compilers warned against viewing its latest gauge of euro zone business as a turning point, especially since there is still a strong risk the euro zone sovereign debt crisis could spiral out of control.
EU leaders last week took a historic step toward fiscal union last week, but pressure is building on reluctant euro zone paymaster Germany to take immediate, radical steps to solve the crisis.
A resolution to the crisis is all the more important as its repercussions spread through global economy. China saw its first year-on-year drop in foreign direct investment in 28 months in November.
The HSBC flash manufacturing purchasing managers' index, the earliest indicator of China's industrial activity, rose modestly to 49.0 in December from 47.7 but pointing to a monthly contraction in activity nonetheless.
Most economists gave a cautious welcome to the euro zone PMI data, which measures changes in the activities of thousands of businesses across the euro zone.
"All in all, despite the further pick-up in December, the PMI data still suggest that euro zone real GDP saw a marked contraction in the fourth quarter," said ING's van Vliet.
The Markit Eurozone Composite PMI, which looks at both the manufacturing and services sectors, rose unexpectedly in December to 47.9 from 47.0 last month.
Furthermore, only France and Germany were responsible for the upturn in the index, while the euro zone's peripheral economies continued to struggle.
Markit said its data pointed to a quarterly economic decline of 0.6 percent in the euro zone in the final quarter of this year.
That would be twice as deep as the contraction expected by economists in a Reuters poll on Wednesday, which also forecast a 0.2 percent fall in the first three months of the new year.
(Additional reporting by Emily Flitter; Editing by Padraic Cassidy)