New Delhi, June 3 -- India's manufacturing sector activity dropped to a three-month low in May as growth in new orders and output softened, a private survey showed on Monday. The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 57.6 in May from 58.2 in April and 58.1 in March. India's manufacturing PMI was 56.3 in February and 57.7 in January. A reading above 50 indicates expansion. "Although rates of increase in new orders and output retreated to three-month lows, they remained well above their respective long-run averages," the survey said. "Panelists suggested demand strength continued to support sales and production, though competition, inflation and the India-Pakistan conflict reportedly weighed on growth." In May, India and Pakistan were locked in a sharp four-day border conflict, marked by heavy shelling and multiple casualties, after tourists were killed in Kashmir in an attack allegedly carried out by Pakistan-backed terrorists. Though the fighting subsided, tensions remain high, with diplomatic ties still strained and security on alert. Meanwhile, the survey showed that goods producers increased input purchases and hiring in May, with employment rising at a record pace. However, input cost inflation hit a six-month high, prompting one of the sharpest selling price rises in 11-and-a-half years. "India's May manufacturing PMI signalled another month of robust growth in the sector, although the rate of expansion in output and new orders eased from the previous month," said Pranjul Bhandari, chief India economist at HSBC. "The acceleration in employment growth to a new peak is certainly a positive development. Input cost inflation is picking up, but manufacturers seem to be able to lessen pressure on profit margins by raising output prices," she added. India's economic growth rebounded in the March quarter after a slowdown in September. Gross domestic product (GDP) for fiscal year 2025 grew by 6.5%, supported by a robust 7.4% expansion in the January-March quarter, show provisional data from the Ministry of Statistics and Programme Implementation. Both figures were lower than growth in the corresponding year-earlier periods-India's economy grew at 7.8% in the fourth quarter of FY24 while the full-year GDP growth was revised to 9.2%. Despite global uncertainties, growth was driven by strong output in agriculture, manufacturing, construction, mining, and services sectors in FY25 compared to FY24. India's FY26 economic outlook is marked by cautious optimism, with GDP growth projectedbetween 6.3% and 6.8%, as per the Ministry of Finance. Interestingly, manufacturing output grew at 4.5% to Rs.29.54 trillion in FY25, although it comes on a higher base, with FY24 manufacturing output growing at 12.3%. Meanwhile, new export orders in May surged at their strongest pace in three years, driven by robust demand from Asia, Europe, West Asia, and the US, the survey said. This boost in sales prompted companies to increase input purchases and expand staffing, with job creation hitting a new record high....