UK manufacturing suffered its worst quarter for nearly three years despite an ‘encouraging’ performance in December, figures show.
The Markit/CIPS purchasing managers' index (PMI) survey, where a reading below 50 indicates a contraction, rose to 49.6 in December, from 47.7 the previous month. The City had been expecting a fall to 47.3.
Manufacturers were boosted by stronger new export orders, which helped make up for the weakness of UK demand. But the overall sector still declined in December, making its performance over the final three months of 2011 its worst since the second quarter of 2009.
The index has now shown a decline for five out of the past six months, fuelling fears the sector will lead the UK economy back into recession.
James Knightley, an economist at ING Bank, said: "While today's headline figure is encouraging, it still suggests that manufacturing will drag GDP growth lower and that recession will remain difficult to avoid."