Even after the growth outlook for the year ended 2018 came in quiet impressive, the Nikkei manufacturing PMI index for the month of May has slowed down to 51.2 as against 51.6 in the April month.
The decline has come on the back of decline in growth of new work orders. As per the IHS Markit economist, the latest purchasing managers' index are a reflection of the weaker expansion with respect of new business, output as well as employment.
The mark of 50 separates expansion from contraction and with the latest figures for the May month, the country has been witness to 10-straight months of expansion.
Inflationary concerns are mounting due to the crude oil impact and as a result output inflation and input cost has stood at the highest levels since the month of February.
The inflationary concerns give cues of a rate hike by the RBI in the August meet in all probability if not in the meet scheduled for June 4-June 6 by as much as 25 basis points. 1 basis point is one-hundredth of a percentage point.
At the same time, propelled by increased demand from the international markets, manufacturer in India registered the highest growth in new work orders (exports) since the month of February. Also, due to weak output stream and new orders, while there has been staff addition in May, it is seen at a softer rate.