LONDON, Nov 5 (Reuters) - British manufacturing output rose

faster than expected in September, and at its fastest monthly

pace since July 2002, rebounding from August's sharp drop,

official data showed on Thursday.

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KEY FIGURES

SEPT AUG F'CAST

Manufacturing %MM 1.7 -2.0 1.0

Manufacturing %YY -9.3 -11.6 -9.7

Industrial %MM 1.6 -2.6 1.0

Industrial %YY -10.3 -11.5 -10.5

KEY POINTS

- Biggest monthly rise in manufacturing output since July

2002

- Biggest monthly rise in industrial output since July 2002

- The ONS said that quarterly 0.8 percent fall in industrial

output would not materially affect the GDP estimate for the

quarter, all other things being equal. Preliminary GDP data last

month showed that industrial output had fallen 0.7 percent over

the quarter.

ANALYST REACTION

JONATHAN LOYNES, CHIEF ECONOMIST, CAPITAL ECONOMICS

'Although the 1.7% monthly rise in overall production was

bigger than expected, downward revisions to previous months'

data mean that production still fell by 0.8% in Q3 overall,

worse than the 0.7% drop the ONS assumed in its preliminary GDP

estimate.

'Admittedly, doubts over the GDP data relate mainly to the

services sector, rather than industry. Note too that industrial

surveys such as the CIPS report on manufacturing published

earlier this week suggest that industry will begin to expand in

Q4, helping overall GDP growth to turn positive.

'Nonetheless, with production still down by more than 10% on

a year ago, the road to recovery in industry will be a long and

bumpy one.'

RICHARD MCGUIRE, STRATEGIST, RBC CAPITAL MARKETS

'Firmer than expected but unlikely, on their own, to prompt

an upward revision to the poor Q3 GDP print. At the margin

perhaps supportive of those members of the MPC taking a glass

half full view of the economy but adding little to the debate

underpinned by the dichotomy between the weak official numbers

and more recent upbeat PMI data.'

PHILIP SHAW, CHIEF ECONOMIST, INVESTEC

'The rebound on the month in both manufacturing and

industrial output was stronger than expected, but downward

revisions to July and August mean that industrial production as

a whole contracted at a slightly quicker rate in Q3 than

initially estimated.'

STEPHEN LEWIS, CHIEF ECONOMIST, MONUMENT SECURITIES

'Looking at the longer term trends they are broadly in line

with expectations. But I don't think that's going to be make a

material difference to the GDP revision.

'Things have been very erratic and it's hard to say whether

this represents the beginning of a bounce back. The year-on-year

comparisons, of course, will improve because of base effects.'

ALAN CLARKE, UK ECONOMIST, BNP PARIBAS

'We had factory shutdowns in August and we've had a bounce

back from that. The fact that factories saw fit to have an

extended summer shutdown shows the sector is still fragile. So

it is recovering but it is still far from full fitness.'

Keywords: BRITAIN MANUFACTURING/ LOOK

(uk.economics@reuters.com, +44 20 7542-2774)

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