The manufacturing sector expanded at its slowest pace in 28 months in June, with the Purchasing Managers Index (PMI) falling 1.1 percentage points month-on-month to 50.9 percent, according to the China Federation of Logistics and Purchasing (CFLP).

It is the third consecutive month of decline for the PMI, a gauge of manufacturing expansion, in China, as the government fights soaring prices by withdrawing liquidity from the market.

The PMI figure was 52 percent in May, 52.9 percent in April, 53.4 percent in March, 52.2 percent in February and 52.9 percent in January.

A reading above 50 percent indicates economic expansion. One below 50 percent indicates contraction. China's PMI has stayed above the boom-or-bust line for 27 months in a row.

Concerning the sub-indexes, the purchase price index, which measures the cost of raw materials, led the declines with a month-on-month drop of 3.6 percentage points in June, while the new orders index, which reflects domestic demand, fell 1.3 percentage points from May to 50.8 percent in June.

The CFLP data also showed that the backlog orders index and raw material inventory index posted declines of more than 1 percentage point last month.

"The PMI decline in June shows that the country's economy is likely to grow at a slower pace this year," Zhang Liqun, a researcher with the Development Research Center of the State Council, said in the CFLP statement.

To break down the June data by 20 industries, the PMI reading for 12 sectors such as electronic machinery and food processing and manufacturing remained above the boom-or-bust line of 50 percent, while the reading for chemical and textile industry as well as transportation equipment manufacturing was below 50 percent.

The PMI data from the logistics federation and the National Bureau of Statistics was lower than market expectations of 51.5 percent, but higher than the HSBC's index of 50.1 percent compiled by the Markit Economics Ltd.

"The continuous decline suggests that the world's second-largest economy is gliding towards a soft landing," said Liu Ligang, chief China economist at Australia and New Zealand Banking Group, adding that the economy was still growing steadily despite the declines in PMI.

"We expect a 13 percent rise in the country's June industrial output, and an economic growth rate of 9.2 percent to 9.4 percent for the second quarter," Liu said.

The slowdown in manufacturing sector reflected the government's tightening measures to rein in inflation had started to kick in.

The consumer price index (CPI), a main gauge of inflation, accelerated to 5.5 percent from one year earlier in May, the highest level in 34 months and well above the government's target ceiling of 4 percent.

The central government has declared curbing soaring inflation its top priority this year and adopted a series of tightening measures to cool the economy, including reining in credit and hiking interest rates and reserve requirement ratios.

The fall in PMI, partly due to the easing of global commodity prices, provided a modicum of good news on the inflation front.

China may adopt less tightening measures during the second half as inflationary pressures eased, Liu said.

He said he expected one interest rate hike ahead of the release of June's economic data and another rise during the third quarter.

The government-backed manufacturing index is based on a survey of purchasing managers in more than 820 companies in 20 industries.