The Purchasing Managers' Index (PMI) of China's manufacturing sector stood at 55.8 percent in January, down 0.8 percentage points from the previous month, the China Federation of Logistics and Purchasing (CELP) said on Monday.

It was the 11th straight month for the index to stand above 50 percent, indicating continuous expansion in China's manufacturing industry.

The figure stood at 56.6 percent in December 2009, the highest since May 2008.

The PMI includes a package of indices to measure manufacturing sector performance. A reading above 50 percent indicates economic expansion, while a reading below 50 percent signals contraction.

The PMI purchasing prices index rose the most by 1.8 percentage points to 68.5 percent in January from the previous month.

The new export orders index rose 53.2 percent, up 0.6 percentage points in January from the previous month.

The overstocked orders index dropped the most in January, by 2.5 percentage points from the previous month.

Zhang Liqun, a researcher with the Development Research Center of the State Council, said the PMI in January indicated industrial production would continue to stabilize and the climb in new export orders signaled an improving export situation.

But the climb in purchasing prices might burden enterprises with heavy production costs, Zhang said.

"In general, the Chinese economy is expected to stabilize its recovery trend," said Zhang. "And in general, the Chinese economy is at a critical stage from economic rebound to stable growth."

The survey, conducted by the National Bureau of Statistics (NBS), covers purchasing and supply managers in more than 700 firms across China. The CFLP launched the PMI in 2005.

The PMI index tumbled to a record low of 38.8 percent in November 2008 as the nation was hit hard by the global economic downturn.

(Xinhua News Agency February 1, 2010)