Growth in the manufacturing sector fell to its slowest rate in nine months in December, figures published today showed. There were also signs of easing inflationary pressures as input and output price rises slowed.

The Chartered Institute of Purchasing and Supply’s purchasing managers index for the sector slipped to 51.9 in December from a downwardly revised 52.5 in November.

The fall in December wrong-footed economists, who had predicted a modest rise to 53.0. A number exceeding 50 indicates expansion.

Andrew McLaughlin, RBS Group Chief Economist, said: "The final quarter of 2006 has seen the expansion of the UK manufacturing sector gradually slip back to its trend level following the surprisingly robust performance seen in the middle of the year."

The manufacturing PMI figure averaged 52.6 in the fourth quarter, down from 53.7 in the third and 54.1 in the second.

Howard Archer, chief UK economist at Global Insight, said: "Slower orders growth and contracting backlogs of work do not bode well for the manufacturing sector over the next few months, particularly as the strong pound is hurting competitiveness,"

However, economists said that the Bank of England was likely to welcome evidence that both input and output prices rose at a reduced rate in December.

The index measuring input prices fell to 58.3, its lowest since August 2005, from 62.5 in November, while the output prices sub-index dropped to 53.5 from 53.8.

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