LONDON, Dec 16 Reuters The downturn across most British businesses eased slightly this month but manufacturers struggled and the economy is still likely to contract this quarter, marking a recession, a survey showed on Friday.

The UK SP Global Composite Purchasing Managers39; Index PMI rose unexpectedly to 49.0 from 48.2 in November, although it remained below the 50 threshold for growth. A Reuters poll of economists had pointed to a slight fall to 48.0.

The dominant services sector drove all the improvement as the decline deepened among British manufacturers, which cut jobs for the first time since October 2020.

The survey echoed other signs that the economy is contracting at a slow pace that is not worsening, with price pressures easing further from historically high levels.

Separate data on Friday showed a surprise fall in retail sales in November, while consumer confidence remained close to alltime lows this month.

The releases still point to the UK being in a shallow, but protracted, recession at the end of 2022 and into 2023, said Daniel Mahoney, UK economist at Handelsbanken.

Composite PMIs from other European countries painted a similar picture, although Britain39;s reading bettered those of France and Germany for the first time since July.

It came a day after Bank of England officials raised interest rates and indicated that more hikes were likely, despite a looming recession, as the central bank tries to bring down inflation that hit a 41year high in…