China's manufacturing sector continued to expand in January, but at a slower pace, which suggests a steady growth trend in the country's economy. Business activity in China's non-manufacturing sector also continued to expand in January, as the Spring Festival drove up retail sales.

Purchasing managers' index (PMI) for China's manufacturing sector fell to 50.4 percent in January from 50.6 percent in December 2012, said the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP) on February 1.

January marked the fourth consecutive month that the PMI remained above 50 percent, according to the CFLP. A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

However, the indicator also dropped for the first time since August 2012 when it hit a nine-month low of 49.2 percent.

The slight retreat suggests that China's economy will exhibit steady growth in the near future, said Zhang Liqun, an analyst from the Development Research Center of the State Council.

Although manufacturers are continuing to expand, lower sub-indices for export orders and overstocked products point only to stable production activity instead of robust growth, Zhang said.

The PMI for the non-manufacturing sector came in at 56.2 percent in January, up 0.1 percentage points from December 2012, said the CFLP. This marked the fourth straight month of rises.