UK manufacturing better than forecasts for December

On the first working day of the new year,a little bit of hope for the battered UK economy.

Figures out this morning from a survey of purchasing managers (PMI) show that activity across the British manufacturing sector continued to contract in December, but at a slower pace.

The index for the sector rose to 49.6 from a revised 47.7 in November whereas forecasts had put the PMI at 47.3. A reading of less than 50 indicates a contraction in activity.

The figures were slightly above forecast with demand up in both Germany and China..

"It is encouraging to see output remain steady last month after the declines of recent months, but with the sector highly exposed to a shaky euro zone and reports of softening demand, ironing out economic problems in key export partners will be critical to how the sector performs," said David Noble, chief executive of the Chartered Institute of Purchasing and Supply.