UPDATE 3-Mexico August auto output hints at recovery

(Recasts to show monthly upswing, adds background, byline)

By Luis Rojas

MEXICO CITY, Sept 8 (Reuters) - Mexico's auto output grew in August compared with the previous month, hinting at a recovery in the sector hit by a deep recession, although production was still down on an annual basis.

Increased exports were likely helped by the U.S. cash for clunkers program, a $3 billion government car-buying incentive aimed at spurring a recovery in the U.S. auto sector, although it may amount to a one-time boost for the industry.

Mexico's auto makers produced 134,501 units in August, up 23.5 percent from July but still 34.3 percent lower than in the year-ago period, the Mexican Automotive Industry Association said on Tuesday.

Exports in August totaled 111,263 units, up 22.4 percent from the prior month but still down 22.4 percent from August last year.

August was the second straight month that Mexican auto production grew and the third consecutive months that exports rose.

Mexico's economy fell sharply in the first half of the year and experts predict mild growth for the rest of 2009. Little data is available so far to indicate whether a recovery has begun.

Surging unemployment in the United States has slammed demand for Mexican exports like automobile and televisions. A deep recession in Mexico has cut local demand for new cars.

"The Mexican consumer continues to be cautious about durable goods purchases," Eduardo Solis, president of the industry group, told reporters. It maintained its 2009 production forecast of a 30 percent fall. (Reporting by Luis Rojas Mena; Editing by Dan Grebler)