HONG KONG Chinas manufacturing shrank slightly last month, a report said Monday, adding to signs of an uncertain recovery in the worlds second-biggest economy.

HSBCs monthly purchasing managers index fell to 49.2 in May. Thats down from 50.4 in April. Readings below 50 indicate a contraction.

Its the first time the index has fallen below 50 since October, although the report said the deterioration was marginal.

The survey is based on responses from 420 manufacturing companies.

The survey suggests a marginal weakening of manufacturing activities towards the end of May, thanks to deteriorating domestic demand conditions, HSBC economist Qu Hongbin said in a statement. With persisting external headwinds, Beijing needs to boost domestic demand to avoid a further deceleration ofmanufacturing output growth and its negative impact on the labour market.

The report adds to signs that Chinas economic recovery is losing momentum.

Economic growth in China slowed unexpectedly in the first three months of the year, dipping to 7.7 per cent from the 7.9 per cent in the previous quarter. Forecasters have cut their growth outlooks for this year.

A similar survey released Saturday that found manufacturing ticked up slightly. That report by the government-sanctioned China Federation of Logistics and Purchasing found manufacturing edged up to 50.8.

The contrasting reports could be a sign of a two-speed recovery.

Bigger companies and ones that cater to Chinas domestic market are more strongly represented by the official PMI while smaller private companies focused on exports are better covered by HSBC and research firm Markits report.