INSTANT VIEW 4-UK Aug factory output falls, trade deficit widens

LONDON, Oct 9 (Reuters) - British factory output fell more than expected in August and the country's trade deficit widened sharply, data showed on Tuesday, dampening prospects of a sustained recovery in the second half of 2012.

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


"The manufacturing number does look somewhat weak and is more consistent with the weakness we've seen in the broader survey data. Certainly it looks like the manufacturing sector is struggling and being affected by the very weak euro area economy and weak global backdrop.

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

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

On trade data:

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


"The industrial output was disappointing but not a major surprise. Overall it was down half a per cent, but I was expecting 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 data comes out next week.

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

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


"I am not surprised to see a dip in the manufacturing numbers given that we had an exaggerated bounce the previous month. It's heartening to see a little bit of continuing growth in North Sea oil and gas output, which I think is still on a downward 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 since April 2012, second-highest on record

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

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