The Indian manufacturing sector stayed in expansion mode in May as a further upturn in new business supported output growth. That said, rates of increase eased in both cases. Spending patterns varied, with employment down but quantities of purchases up from April. 

Meanwhile, input costs rose at the slowest rate since last September, whereas charge inflation accelerated. With regards to future performance, goods producers were at their most optimistic in six months. Remaining above the no-change mark of 50.0 in May, the headline Nikkei India Manufacturing Purchasing Managers' Index (PMI) signalled a further improvement in operating conditions. That said,  the  PMI  was  down  from  52.5  in  April  to  a three-month low of 51.6.

May data pointed to softer expansions in both new orders and production. Incoming new work rose at the  weakest  pace  since  February, with slowdowns evident in the consumer and intermediate goods categories. Capital goods producers, meanwhile, recorded a contraction in order books. Output growth across the manufacturing sector as a whole was at a three-month low.

Businesses further increased their purchasing activity during May. Moreover the upturn in buying levels was more pronounced than in April.

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