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INSTANT VIEW 5-UK Aug factory output falls, trade deficit widens

LONDON, Oct 9 (Reuters) - British factory output fell morethan expected in August and the country's trade deficit widenedsharply, data showed on Tuesday, dampening prospects of asustained recovery in the second half of 2012.

Following is a summary of the data and economists'reactions.

ANALYST VIEWS ANNALISA PIAZZA, NEWEDGE STRATEGY:

"Today's IP report doesn't show any major surprise. UKmanufacturing activity remained under pressure in August,despite the solid increase in business confidence (i.e PMI).

"The annual pace of decline of the manufacturing sector hasbeen moving in a narrow range since the start of the year,suggesting a negative contribution to GDP growth.

"In Q3, IP might provide a boost to GDP growth as theaverage figures incorporate the technical rebound seen in July.However, the picture for manufacturing activity remains sluggishfor the remainder of the year as demand from abroad is underpressure and companies are generally sceptical to revise theirinvestment plans in the current uncertain environment."

VICTORIA CLARKE, INVESTEC:

"The manufacturing number does look somewhat weak and ismore consistent with the weakness we've seen in the broadersurvey data. Certainly it looks like the manufacturing sector isstruggling and being affected by the very weak euro area economyand weak global backdrop.

"(But) the figures aren't too concerning for the Q3 GDPfigures which we still expect to show a decent bounce.

"We think we will see the UK exit a recession in the Q3figures, the question is how much of a drag industrialproduction and manufacturing are on that. But certainly, there'senough evidence there to suggest that services will be enough topull us out of recession in those Q3 figures."

On trade data:

"What we think we've seen is a bit of correction from therespectable trade deficit that we saw in July. Exports againlook to be pretty weak, they slump on the month and any hopesthat we'll see a significant improvement over the months aheadare likely to be well overdone because the global backdropremains pretty tough and exports are going to struggle."

ALAN CLARKE, SCOTIABANK:

"The industrial output was disappointing but not a majorsurprise. Overall it was down half a per cent, but I wasexpecting a bit worse.

"So if you factor that into the likely GDP output for Q3,we'll be looking at a gain of about three quarters of a percent.We ought to know much more when the construction industry datacomes out next week.

"As for Q4, it's obviously very early days, but once thelights went out on the closing ceremony of the Olympics, we werelooking for a bit of payback.

"There's still time for the growth surveys to improve andget the economy back on track."

BRIAN HILLIARD, SOCIETE GENERALE:

"I am not surprised to see a dip in the manufacturingnumbers given that we had an exaggerated bounce the previousmonth. It's heartening to see a little bit of continuing growthin North Sea oil and gas output, which I think is still on adownward trend."

******************************************************* MANUFACTURING OUTPUT AUG JULY (PRV JULY) FCAST Mth-on-mth change in pct -1.1 3.1 (3.2) -0.6 Yr-on-yr change -1.2 -0.7 (-0.5) -0.6 3-mth/3-mth change -0.7 0.1 (0.2) INDUSTRIAL PRODUCTION Mth-on-mth change in pct -0.5 2.8 (2.9) -0.5 Yr-on-yr change -1.2 -0.8 (-0.8) -1.1 3-mth/3-mth change -0.1 UNCH (UNCH) TRADE FIGURES AUG JULY FCAST Goods balance -9.844 -7.337 (-7.149) -8.50 Non-EU goods balance -4.972 -2.929 (-2.877) -4.00 EU 27 goods balance -4.872 -4.408 (-4.272)

- Biggest total goods and services trade deficit sinceApril 2012, second-highest on record

(Reporting by Li-mei Hoang, Peter Schwartzstein and OlesyaDmitracova)

((olesya.dmitracova@thomsonreuters.com; +44 20 7542 8051;Reuters Messaging:olesya.dmitracova.thomsonreuters.com@reuters.net))

Keywords: BRITAIN ECONOMY/