Manufacturing still weak but shows signs of stabilising

Manufacturing beat expectations in December, showing signs of stabilising after a two-month decline as orders from China and Germany picked up, although the risk of another recession persists, a survey shows.

The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) rose to 49.6 from an upwardly revised 47.7 in November, data compiler Markit said on Tuesday. The reading was still below the 50 mark that signals growth in activity but only slightly and the reading confounded forecasts in a Reuters poll for a fall to 47.4.

Over the fourth quarter as a whole, the sector registered its worst performance since the second quarter of 2009 when Britain was in deep recession, said Markit economist Rob Dobson.

"Manufacturing will therefore likely be a drag on the Q4 GDP figures," he said.