The rate of growth in the UK's manufacturing sector slowed in December as concerns over the global economic crisis saw orders hit a two-year low, figures from the Chartered Institute of Purchasing and Supply/NCT show.

The organisation's purchasing managers' index slipped from 54.3 in November to 52.9 in December, below the forecast level of 53.6. But it stayed above 50.0, the point at which the market begins to contract.

"Client confidence is still being affected by tight credit market conditions and high cost inflation, leading many to postpone non-essential expenditures," said NTC economist Rob Dobson.

The research also suggested that inflation in the manufacturing sector is easing slightly despite the high cost of raw materials, making the possibility of an interest rate cut in the next few months more likely.