India's manufacturing activity slowed to a three-month low in May, with the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index falling to 57.6 in May from 58.2 in April, according to data released by research firm S&P on Monday.

The headline figure was above the neutral mark of 50.0 and its long-run average of 54.1.

While the growth in new orders helped the output, the expansion receded to its weakest in three months. The upturn was curbed by cost pressures, fierce competition, and the India-Pakistan conflict, the report said.

New export orders were up at the strongest levels recorded in three years, lifted by the favourable demand from Asia, Europe, the Middle East, and the US.

There was also a record growth in employment, as hiring rose at the fastest pace in the PMI survey's history, with a greater emphasis on permanent roles over temporary ones.

"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 the pressure on profit margins by raising output prices," Pranjul Bhandari, Chief India Economist at HSBC.