The UK manufacturing sector contracted in December, a survey has found, adding to fears that the sector is heading back into recession.

The Chartered Institute of Purchasing and Supply's (CIPS) latest purchasing managers' index, which provides a snapshot of conditions in the sector, fell to 49.5 in December, down from a 50.1 the previous month.

A reading below 50 indicates that manufacturing is shrinking.

CIPS said the worse-than-expected figure was down to a "marked contraction of both employment and stocks of purchases," and a big drop in the new orders index.

It also noted that the strength of the pound was hitting manufacturing exports.

Recession looms?

December's reading was the first time the sector had contracted for five months.

"This is pretty gloomy and supports the idea that the sector is heading back into recession," said Jonathan Loynes at consultancy Capital Economics.

"And it is not just global demand that is causing the trouble, but industry just cannot compete at these exchange rate levels."

In December, employers' group the CBI warned the manufacturing sector was on the brink of its second recession in as many years, as orders fell amid the global economic slowdown.

There was more bad news for the UK economy from the High Street on Thursday, with signs that the consumer boom could be faltering.

Figures from the CBI showed retail sales in the run-up to Christmas were lower than for the same period a year ago.