Markit said the headline index measuring the manufacturing sector rose to 49.6, which puts it closer to the break-even point of 50. Above 50 indicates business growth.
In November, Britain's manufacturing PMI or Purchasing Manager's Index, was at 47.7.
Markit said the level of production "stabilized" in December. For the final quarter of 2011, however, the headline PMI was at the lowest level since the second quarter of 2009.
The new orders index declined for the sixth consecutive month in December, but new export orders rose for the first time in five months.
The gain "reflected increased levels of new work from clients in Germany, East Europe and China," Markit said.
"A solid upsurge in new export business countered some of the weakness in the domestic market," said Markit senior economist Rob Dobson in a statement.
"Job losses were less widespread than November, suggesting pessimism about the coming year may have lifted a little," he said.
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