The UK's fragile manufacturing sector was on the edge of recession last month as firms battled the economic gloom.

A fall in production growth as companies cut costs to cope with weak markets meant manufacturers suffered their weakest month since July.

The Chartered Institute of Purchasing and Supply Managers (CIPS), said its activity index fell to 50.0, meaning the sector effectively stagnated.

A figure more than 50 illustrates an expansion while one below this level signals an outright contraction.

Director Roy Ayliffe said firms had enjoyed cheaper raw material prices and there were signs demand was creeping up.

The new orders index rose to 52.1 last month from 51.3 in October as strong domestic demand offset weakness overseas.

He said overall, activity in the sector was likely to bump around at the current levels for some time.

Manufacturers have laid off thousands of employees in the past year as they tried to weather the impact of the slowing global economy on profits.

Export demand fell last month at the sharpest rate for 11 months on the back of the strong pound and falling demand in Europe. CIPS said monthly employment levels continued to drop Simon Rubinsohn, chief economist at fund manager Gerrard, said it was unlikely the figures would impact this week's interest rate decision.

The Bank of England's monetary policy committee (MPC) meets tomorrow and Thursday week to decide whether to keep interest rates at four per cent for the 13th month in a row.

Mr Rubinsohn said: "This will fall on deaf ears at this week's MPC meeting."