BRITAIN'S struggling manufacturing sector contracted for the 11th month in a row in January - but the suffering eased slightly, a survey has revealed.

The monthly report, by the Chartered Institute of Purchasing and Supply (CIPS), showed its index - which provides an overall view of the health of the sector - stood at 46.4 in January, up from 45.2 in December.

On the CIPS scale, a reading of above 50 shows growth, while below signifies contraction. CIPS said although the indicator remained below the critical no change mark of 50, it was at its highest level for three months.

The survey showed order books continued to fall, while there were subsequent cut-backs in production and employment.

Overall demand fell for the tenth straight month, as customers continued to cut expenditure.

Export orders showed contraction for the 11th month running as the effects of the international manufacturing recession continued to hit foreign sales, while the exchange rate effects of the strong pound were also reported to have damaged overseas orders.

However, CIPS said the gloomy picture was not borne out by the whole of the sector.

The consumer goods sector continued to outperform the broader manufacturing economy, and January saw the strongest growth in consumer demand for six months.

John Butler, economist at HSBC, said the survey showed some signs that the manufacturing sector was starting to recover "or at least stabilise at its low level".

He added: "The manufacturing sector is probably past its worst but the recovery is likely to be disappointing."