U.S. manufacturing activity continued to expand in March, but the rate of growth slowed, according to a report released Monday.

The Institute of Supply Management's monthly reading on the U.S. manufacturing sector came in at 51.3 in March, down from 54.2 in February and far short of 54, that was expected by economists surveyed by Briefing.com. The index is compiled from a survey of manufacturing supply managers, and any number above 50 indicates the sector is growing.

This marks the fourth consecutive month of growth for the sector.

Factories have continued to hire, a welcome sign ahead of the monthly employment report on the U.S. jobs market slated for release on Friday. The ISM employment index increased 1.6 percentage points from last month.

Survey respondents were mostly upbeat about the outlook in the coming months, but one manufacturer noted that there are still some areas of concern, particularly in the oil and gas sector, which reported a decrease in new orders.

"Post-election in the U.S. — companies within the oil and gas sector are still waiting for signs of some regulatory certainty or stability," said a manufacturer of petroleum and coal products.

A separate report on Monday showed that activity in China's manufacturing sector accelerated in March, as domestic demand continued to pick up steam.

HSBC's manufacturing index rose to 51.6 from 50.4 in February, slightly weaker than its initial "flash" estimate of 51.7.