Indonesia's manufacturing activity continued to contract in May, but at a slower pace than the previous month, according to the latest S&P Global Indonesia Manufacturing Purchasing Manager's Index (PMI) released on Monday.

The PMI slid to 47.4 in May from 46.7 in April. A reading above 50 indicates expansion in the manufacturing sector, while a reading below 50 signals contraction.

The decline is attributable to a continued decline in output and new orders.

Weaker new orders led to a continued drop in production in May. Output declined for the second straight month, though the pace was slightly slower than in April.

Due to softer business conditions, manufacturers also reduced their input purchases for the second consecutive month. On the price front, input costs rose sharply in May, marking the first increase in inflation in three months. S&P said.

However, manufacturers hired more workers for the fifth time in six months, expecting demand to recover.

Looking ahead, the business confidence index improved for the upcoming 12 months, S&P added.