China's manufacturing activity in private and export-oriented companies shrank for the first time in seven months and the lowest since October 2012, HSBC said in its final figure for the May Purchasing Managers' Index.

The 49.2 reading was lower than the preliminary "flash" index number of 49.6, released on May 23.

The May figure dropped sharply from 50.4 in April, the bank said.

A reading below 50 means contraction.

Qu Hongbin, chief economist for China at HSBC, said the latest PMI reading suggests a marginal weakening of manufacturing activities toward the end of May because of deteriorating domestic demand conditions.

"With persisting external headwinds, China needs to boost domestic demand to avoid a further deceleration of manufacturing output growth and its negative impact on the labor market," Qu said in a note. "The new leaders should strike a delicate balance between reform and growth."

In contrast with the HSBC PMI, the official government PMI, which mainly tracks state-owned enterprises, expanded to 50.8 in May from April's 50.6.

Global investors have been concerned about China's growth because it has been a beacon of strength in a world beset by economic slowdown.