But it remained comfortably above the 50-point mark that separates growth from contraction on a monthly basis.
That was in line with expectations and unchanged from the December reading.
Analysts surveyed by Reuters had forecast the reading would ease marginally to 51.5.More news: Knight-Swift Transportation Holdings Inc (KNX) Position Lowered by Northpointe Capital LLC
The December reading had marked the highest level of the index since it began measuring the performance of the sector nearly 20 years ago.
Output rose at the quickest pace since February 2011 and new orders grew at the sharpest pace in 83 months. Economists expect activity to slow this year as the government strives to cool the property market.
"The manufacturing industry had a good start to 2018".More news: Chiefs deal Smith to 'Skins
"Strong production growth was supported by a further rise in employment during the month, with workforce numbers increasing solidly, albeit at a slightly slower pace", it added. "Going forward, we should keep a close eye on the stability of the demand side", Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, wrote in a note accompanying the Caixin release.
The official non-manufacturing PMI released on Wednesday expanded to 55.3 in January from 55 in December.
The Caixin/Markit survey focuses on small and mid-size businesses in China and comes after the world's second-largest economy reported official January manufacturing PMI on Wednesday that hit an eight-month low.More news: South Korean skiers arrive in North Korea for joint training
In the fourth quarter of previous year, growth in services, which accounts for over half of China's economy, expanded.