China's factory activity shrank for the first time in seven months in May as both domestic and external demand softened, while growth in the services sector cooled, pointing to slowing momentum in the world's second-largest economy.
The HSBC/Markit Purchasing Managers' Index (PMI) for May fell to 49.2, the lowest level since October 2012 and down from April's final reading of 50.4.
The figure was slightly lower than a preliminary reading of 49.6 released on May 23. Fifty divides expansion from contraction compared with the month before.
"The downward revision of the final HSBC China Manufacturing PMI suggests a marginal weakening of manufacturing activities towards the end of May, thanks to deteriorating domestic demand conditions," said Qu Hongbin, chief China economist at HSBC.
The reading adds to evidence in recent weeks that China's economic growth is losing momentum.
Earlier on Monday, the official PMI for the non-manufacturing sector fell to 54.3 in May from 54.5 in April, the lowest since September last year.
The Chinese government's official manufacturing PMI, released on Saturday, rose but remained close to 50. It ticked up to 50.8 in May from April's 50.6.
"Together with the official PMI above the 50 percent, the two figures signal the current stable economic growth situation has not been changed," said Cai Jin, a vice president at CFLP, the China Federation of Logistics and Purchasing.
The CFLP conducts the official survey together with China's National Bureau of Statistics.
Both official PMIs focus on bigger and state-owned firms, while the HSBC/Markit series covers more smaller private enterprises. The differing results point to a two-tier recovery.
"Big manufacturers are supported by state-led investment while smaller firms are more exposed to the volatile export market," said You Hongye, an economist at China Essence Securities in Beijing.
"We still cannot see any signs of recovery but the chances of any sharp slowdown are also small."
In the HSBC manufacturing PMI, compiled by UK-based Markit Group Ltd, the sub-index for total new orders dipped to 48.7, the first time it has retreated below 50 since last September, suggesting weaker demand from domestic firms.
The survey also showed the new export orders sub-index fell for the second consecutive month below 50, implying lethargic external demand due to a patchy U.S. recovery and Europe's nagging debt crisis.
The IMF and OECD last week cut their forecasts for China's 2013 economic growth to 7.75 percent and 7.8 percent, respectively.
China's annual economic growth slowed to 7.7 percent in the first quarter from 7.9 percent in the previous quarter. The full-year annual growth of 7.8 percent in 2012 was the weakest since 1999.
The IMF's cut brings it into line with recent revisions by private institutions, including Bank of America-Merrill Lynch, which pared its forecast this month to 7.6 percent from 8 percent, and Standard Chartered, which cut its estimate to 7.7 percent from 8.3 percent.
ING last month reduced its prediction to 7.8 percent from 9 percent.
Despite the slowdown, most economists believe Beijing will refrain from big-bang stimulus as long as the labor market is holding up, since employment is crucial for social stability.
The government has set a 2013 growth target of 7.5 percent, a level Beijing deems sufficient for job creation while providing room to deliver reforms to the economy to reduce its reliance on exports.
However, while some economists believe that Beijing may miss its own growth target this year, China's leaders for their part appear to be comfortable for now with a moderation in economic growth.
Premier Li Keqiang said last month the country has limited room to rely on government spending or policy stimulus to spur its growth, dispelling market speculation that Beijing may act to pump-prime its economy.