UPDATE 3-Mexican economy up 3.7 pct in Q3 on service sector

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By Noel Randewich and Luis Rojas

MEXICO CITY, Nov 16 (Reuters) - Mexico's economy grew 3.7 percent in the third quarter, as strength in services offset weakness in manufacturing, although expansion trailed expectations.

Services grew 4.7 percent annually and agriculture was up 5.3 percent, the government said on Friday in a report.

Although automobile production has recently recovered, industrial output increased only 1.8 percent in the third quarter compared with the year-ago period.

Manufacturing, a mainstay of Mexico's economy, also expanded 1.8 percent.

Strong activity in the service sector suggests the economy may be relying less on U.S. demand for manufacturing products.

"The important thing is that the service sector is giving the economy some protection from outside influences," said Jaime Ascencio, an analyst at Actinver brokerage. "Next quarter, we could see (overall) growth between 3.2 and 3.7 percent."

Mexico sends about 80 percent of its exports to the United States, making it more sensitive than other countries in Latin America to U.S. economic trends.