The China Caixin manufacturing purchasing managers' index (PMI) for January slowed from December, missing a Reuters poll forecast, but continued to show the mainland's economy was recovering.
The reading came in at 51.0 in January, down from December's 47-month record of 51.9 and below a Reuters' poll forecast for 51.8.
A reading above 50 indicates expansion, while a reading below signals contraction.
"The rate of improvement slowed since December, as output and new orders increased at weaker rates amid a further reduction in employment," the Caixin PMI statement said on Friday. "At the same time, inflationary pressures remained sharp, with both input costs and output charges increasing at rates scarcely seen throughout the past five years."
In December, China's PPI (producer price index) climbed to a five-year high, rising 5.5 percent on-year, exiting years of deflation. Producer prices had slumped in recent years amid excess capacity in many industries and a slowdown in global growth. That also signaled not just likely stabilizing economic growth, but also a likely pick up in corporate profits.