* July, August weak, as expected
* Saw no upturn after summer holidays in Sept
* Still expects volumes to fall less yr/yr in Q3 vs H1
* To continue producing less than sales through 2009
(Adds quotes, detail, background)
By Johannes Hellstrom
STOCKHOLM, Sept 15 (Reuters) - Sweden's SKF, the world's biggest bearings maker and a bellwether for the manufacturing sector, said on Tuesday it had yet to see any recovery in demand though it still expected sales volumes to decline at a slower pace in the third quarter. "July and August was weak, as expected, but we don't see any dramatic change in September apart from the seasonality change," SKF Chief Executive Tom Johnstone said in a telephone interview.
"We haven't seen any uptick after the summer holidays."
SKF, whose bearings are used in products ranging from dishwashers to passenger jets, said in July demand was showing signs of stabilising, though a recovery was not in sight.
"I am not optimistic for a quick recovery in the business," Johnstone said on Tuesday.
"You will start to, month-on-month and quarter-on-quarter, maybe see slight growth, but that doesn't mean things are improving. It just means that you're boating along the bottom."
Market demand for products from the likes of SKF evaporated in a matter of weeks last year as the global financial crisis pulled the plug on years of easy credit and sent economies across the world into deep recessions.
The company, which has cut thousands of jobs to adapt to the head-long tumble of its main markets, has forecast the decline in its sales volumes will be slightly less in the third quarter than the 29-percent fall posted in the first six months.
"While overall (sales volumes) will be something similar to what we said, the mix has been a little bit different, with Automotive a little bit better than we expected and the industrial business a little bit weaker," Johnstone said.
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Johnstone also said the company planned to continue producing less than it sold throughout this year to run down its inventories, built up to cater to the once-booming market.
"In the third quarter we will still have a gap between sales and production, that's clear. A similar type of gap that we have seen," he said. "I think when we get to the fourth quarter that gap will narrow quite a bit."
"Probably next year I think we may still run overall ... production a little bit lower than sales, but not in all areas."
SKF's customers have also been scrambling to scale back inventories over the past year, but Johnstone said the destocking process that has reinforced the fall in demand was showing signs of drawing to a close.
"I don't expect a V-type recovery. But I do expect that what you will start to see first of all is a correction (with) our customers purchasing from us more in line with their usage rather than in line with their usage minus destocking," he said.
"I think we are getting close to it. I think it will be sometime between now and the end of the year." (Reporting by Johannes Hellstrom; writing by Niklas Pollard; editing by Simon Jessop)