NEW YORK (CNN/Money) - A survey of manufacturing executives released Tuesday showed the pace of growth at their companies slowed in January, as the closely watched reading came in below Wall Street expectations.

The Institute of Supply Management index, based on a survey of manufacturing purchasing managers, came in at 56.4, down from a revised 57.3 reading in December. Any reading above 50 indicates growth in the sector.

Economists surveyed by Briefing.com had forecast the index to fall to 57 for January.

The January report marked the 20th straight month that the manufacturing sectors improved, and the ISM statement said the latest survey was relatively bullish for continued growth.

"January's (survey) reflects continuing strength in manufacturing," said a statement from Norbert Ore, chairman of the group's business survey committee. "Production and employment both accelerated during the month."

"Prices, particularly energy prices, continue to provide a challenge to buyers," Ore added. "However, the rate of increase of prices continues to decelerate, raising hopes that price inflation will moderate as the year advances."

The survey's prices subindex fell to 69 from 72, as those reporting paying higher prices during the month fell to 45 percent from 52 percent in December, and those reporting paying the same amount rose to 48 percent from 40 percent in the earlier period.

The employment index also improved, rising to a 58.1 reading from 53.3 in December. It marked the 15th straight month of growing employment in the sector after the survey showed a loss of jobs for the previous 37-month period.

It marked the best employment reading since June 2004, and the third best month during this 15-month string of improved hiring readings.

The survey found 23 percent of those surveyed reporting higher employment levels at their companies, compared with 19 percent in the previous survey.

There was, however, weakness in new orders, whose index fell to 56.5 from 62.6, as those reporting increases in new orders declined to 34 percent from 39 percent a year earlier.

And the indexes that measured customers' inventories, backlog of orders and new export orders also showed a slowing in the sector, although all continued to indicate growth for the sector.

Mark Vitner, senior economist at Wachovia Securities, said he believes that forecasts for January probably didn't take into account the amount of spending that took place in December before a change in the tax law that gave businesses less beneficial treatment of capital spending done this year.

"That caused some orders to be pulled forward into December that might have normally occurred in January or February," Vitner said.

The reading comes on the first day of the meeting of Federal Reserve policymakers, who will weigh whether they can stay with their policy of measured interest rate hikes or whether economic growth and inflation are growing so fast that more aggressive hikes are in order.

A quarter-percentage point rise in interest rates is widely expected to be announced Wednesday when the two-day meeting concludes.