LONDON, Dec 7 (Reuters) - British manufacturing output fell

in October at the fastest pace since June when extra public

holidays dented production, data showed on Friday.

*******************************************************

KEY FIGURES FOR OCTOBER INDUSTRIAL PRODUCTION

OCT SEP F'CAST

Manufacturing %MM -1.3 UNCH (0.1) -0.2

Manufacturing %YY -2.1 -1.7 (-1.0) -0.2

Industrial %MM -0.8 -2.1 (-1.7) 0.7

Industrial %YY -3.0 -3.2 (-2.6) -0.6

KEY POINTS

- Biggest monthly and yearly falls in manufacturing output

since June

- Steepest yearly fall in oil and gas extraction since

records began in Jan 1998

ANALYST COMMENT

ROSS WALKER, RBS

'The weakness looks pretty broad-based. I mean, everything

seems to be have been clobbered ... We had an underlying

deterioation in the survey data but nothing on this scale.

'It's not obvious that the industrial sector would have been

a big beneficiary of the Olympics, whereas as you might have

expected a bigger level effect in some service industries, it's

not obvious why you would have seen that in manufacturing.

'Obviously there is weakness in the energy side as well but

that's less pronounced, the bigger fall is in the manufacturing

data and that's always the better gauge of underlying conditions

in the economy. It's a very bad number and it's not immediately

obvious why it is as bad as it is.'

On the prospect of more QE:

'February might be a bit too early but you certainly can't

rule it out. In general, here, the euro zone, even in the U.S.,

there does seem to be a loss of momentum again.

'I think the signal from the November Inflation Report was

that they seemed to move to a more neutral position, they raised

the inflation projection but this early data for Q4 seems to be

weaker than expected. If we do get any more policy action, it's

not going to tightening in terms of the next move.'

DAVID TINSLEY, BNP PARIBAS

'The latest release was shockingly bad.

'Some of the weakness today is likely to reflect partly

erratic, reflecting in part an unwind in the food sector from

Olympic-related activity (beer sales are sharply lower).

'There should also be a strong rise in oil and gas

production coming as the rigs come back on line - the cold

weather may also help utility output.

'But overall this is very bad news at the start of the

fourth quarter. We are looking for a drop back in GDP over the

quarter, and this data confirms this as likely.'

HOWARD ARCHER, IHS GLOBAL INSIGHT

'This is a dire set of data. While it has been evident that

the manufacturing sector is finding life very tough at the

moment, the 1.3 percent drop in output in October is far worse

than expected and very worrying.

'It means that industrial production fell by a further 0.8

percent in October and is set to be a significant drag on GDP in

the third quarter.

' Unless services output can enjoy a strong end to the year,

it looks increasingly inevitable that GDP will suffer a renewed

drop in the fourth quarter.'

MIKE RIGBY, BARCLAYS

'It has been a tough year for UK manufacturers as they

continue to be battered by depressed domestic demand and weak

demand from the euro zone.

'This week's Autumn Statement, however, brings better news,

with the focus on infrastructure investment and export support

providing much needed stimulus for our manufacturers.'

BRIAN HILLIARD, SOCIETE GENERALE

'Somewhat disappointing - a little bit out of line with what

the surveys were telling us. We've had a lot of volatility in

recent months over the Olympics, but we'd expected things to

settle down, so that is going to dampen people's views about Q4

GDP.

'It's such a large move I wonder if there's not some special

factors there that we're not aware of... I would expect at least

stabilisation in coming months because we're getting signs of

that happening in continental Europe and I think that will help

to support UK output as well.'

ALAN CLARKE, SCOTIABANK

'Very disappointing - triple dip (recession) here we come.

Part of the weakness can be explained by the North Sea oil

platform which is undergoing maintenance.

'But manufacturing was diabolical. Sadly, I think there is

not a lot to suggest that it is temporary. Survey data has been

fairy downbeat.

'The real game-changer is at the end of the month - the

monthly services data because that is three-quarters of the

economy.

'We had bad trade data earlier in the week, bad industrial

production today and employment next week is likely to cool off

further. More doom and gloom.'

PHILIP SHAW, INVESTEC

'These are really poor numbers. We had anticipated the

weakness of the oil and gas sector in October but not the extent

of the decline in the manufacturing sector.

'It really does now raise the prospects of a contraction in

the economy as a whole in the fourth quarter unless we see some

very good news over the next couple of months.

'Although the MPC left policy on hold yesterday, there will

have been a serious discussion yesterday about whether to

sanction more QE (quantitative easing).'

(Reporting by Li-mei Hoang, Peter Griffiths and Natalie Huet)

Keywords: BRITAIN MANUFACTURING/

(limei.hoang@thomsonreuters.com)(+44)(0)(20 7542 6513)

COPYRIGHT

Copyright Thomson Reuters 2012. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.