The Markit/CIPS headline PMI index which combines output, orders and employment rose to 49.6 from 47.7 in November, where anything below 50 indicates a contraction in activity. It was the third successive month below 50.
Economists had forecast a sharper fall in the PMI to 47.3.
Samuel Tombs, UK economist at Capital Economics said the manufacturing PMI marked "a relatively good start" to economic data in 2012, but warned it should not be interpreted as a sign that the UK industrial recovery was back on track.
Manufacturing output actually grew in December according the survey, rising just above the crucial 50 mark to 50.1 from 47.4 in November.
Both new orders and employment continued to shrink in December, but at a slower place compared with the previous month. Read More