The Middle East remained the No. 1 market for American arms manufacturers last year, although total U.S. arms exports fell sharply, according to a new study.

The report also said McDonnell Douglas Corp. was one of the few major defense contractors to post a sales increase for the year. The St. Louis-based company assumed the top industry position with sales of $657 million.The value of contracts awarded to U.S. defense contractors for military equipment and services earmarked for export abroad fell to $4.9 billion - off 22 percent from the 1986 level and 44 percent below 1985's total, the report said.

The study examined sales in the 12-month period ended Sept. 30.

"The overall decline in Foreign Military Sale awards led to a drop in the level of arms export business for 17 of the top 25 U.S. arms exporting companies in 1987," the report said.

The study was conducted by the Investor Responsibility Research Center, which bills itself as a non-partisan organization dedicated to impartial study of issues involving corporate America.

The group has been analyzing foreign arms sales for several years, focusing on the official Foreign Military Sale, or FMS, transactions, that are arranged and overseen by the U.S. government. FMS sales account for about 84 percent of all U.S. arms exports; the remainder normally involved company-to-country agreements.