Manufacturing growth of India slows

Activity in India's manufacturing sector grew at a weaker pace in May from the previous month, a business survey showed on Friday, while inflationary pressures picked up again amid rising oil prices in another sign that an interest rate hike is around the corner.

A slower expansion in output and domestic demand helped push the Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, down to 51.2 in May from April's 51.6. It also lagged a Reuters poll median of 51.5.

But it remained above the 50-mark that separates growth from contraction for the tenth month in a row.

More significantly, the survey yet again showed a build-up of inflationary pressures that would no doubt be watched closely by policymakers.

It backs a Reuters poll of economists that forecast the Reserve Bank of India (RBI) to hike rates in August, a dramatic turnaround from just a month ago when a survey predicted an increase only in the second half of 2019.

“A build-up of inflationary pressures re-emerged with input cost and output charge inflation at the strongest since February, due to the upswing in global oil prices,” Aashna Dodhia, an economist at IHS Markit, said in a release.