* Euro zone factory sector shrinks for 5th month in Dec
* Manufacturing PMI rises slightly from November
* Output, orders fall in all euro zone countries, PMIs show
By Andy Bruce
LONDON, Jan 2 (Reuters) - Euro zone manufacturing activitydeclined for a fifth consecutive month in December, although ata slightly slower rate than November's 28-month record low, asurvey showed on Monday, suggesting the decline would continuein the early months of 2012.
Markit's Eurozone Manufacturing Purchasing Managers' Index(PMI) rose slightly in December to 46.9 from November's 46.4,but marked its fifth month below the 50 mark that divides growthfrom contraction. It was unchanged from an earlier preliminaryreading.
Survey compiler Markit said levels of production and neworders fell in all of the euro zone countries covered by thesurvey for the second month running.
"Despite the rate of decline easing slightly in December,production appears to have been collapsing across the singlecurrency area at a quarterly rate of approximately 1.5 percentin the final quarter of 2011," said Chris Williamson, chiefeconomist at Markit.
"The survey also points to a strong likelihood of furtherdeclines in the first quarter of the new year, with producerscutting back headcounts, inventories and purchasing."
The euro zone economy is already stuck in a recession thatwill last until the second quarter of 2012, Reuters polls ofeconomists suggested last month. They forecast the economy willproably see no growth this year.
Business and consumer confidence in the currency bloc hasbeen eroded by a weakening global economy and by euro zonepolicymakers' failure to make progress on resolving the eurozone debt crisis. Austerity measures imposed to try and cut highdebt levels in the currency bloc risk further undermining eurozone economies this year, analysts say.
The new orders component of the December PMI survey alsopicked up slightly, to 43.5 in December from 42.4 the previousmonth, but it remained weak and Markit warned of a persistentand worrying divergence in order levels and output.
"Worryingly, new orders are falling at a far faster ratethan manufacturers have been cutting output, meaning firms havebeen reliant on orders placed earlier in the year to sustaincurrent production levels," said Williamson.
"This is particularly evident in Germany, and suggests thatoperating capacity will be slashed in coming months unlessdemand revives."