On price rise, the survey said that the rate of inflation softened to the slowest in eight months."The upturn in the Indian manufacturing sector took a step back in May, with softer demand causing slower expansions in output and the amount of new work received by firms," said Pollyanna De Lima, Economist at IHS Markit and author of the report, adding that there was also a renewed decline in new export orders. Incoming new work rose at the weakest pace since February, with slowdowns evident in the consumer and intermediate goods categories, while capital goods producers recorded a contraction in order books.The Indian manufacturing sector, however, stayed in expansion mode for the fifth consecutive month in May.5 in April to a three-month low of 51.25 per cent, but increased reverse repo rate to 6 per cent from 5.During May, there was "softer expansions" in both new orders and production.With regards to future performance, goods producers were the most optimistic in last next six months, with firms expecting new product launches, machinery acquisitions and marketing campaigns to support output growth in the year ahead.
A reading above 50 indicates expansion, while any score below the mark means contraction.The Reserve Bank in its monetary policy review meet on April 6 kept the repurchase or repo rate -- at which it lends to banks -- unchanged at 6.Meanwhile, muted inflationary pressure may prompt the Reserve Bank to adopt an accommodative policy stance, the survey said."With inflation under control and manufacturing growth below par, we may see the RBI changing neutral monetary policy stance Woodworking Drilling Equipment Manufacturers to accommodative in coming months in order to support the economy," Lima said.The Nikkei Markit India Manufacturing Purchasing Managers Index (PMI) -- an indicator of manufacturing activity -- declined from 52