New Delhi: India's manufacturing sector activity growth rose to a three-month high in May, on sustained demand, infrastructure projects and new business gains, even as cost pressures intensified, a private monthly survey said on Monday.The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 55.0 in May from April's 54.7. A reading above 50 indicates expansion and below that signifies contraction.Output growth accelerated, while purchasing activity and stocks of finished goods rose at a faster pace. New orders, a key barometer of demand, grew at the fastest rate since February, driven by civil engineering projects, competitive pricing and favourable demand conditions."India's final manufacturing PMI points to another month of possible precautionary stockpiling as the Middle East conflict remains unresolved," said Pranjul Bhandari, chief India economist at HSBC.Underlying data showed that the domestic market provided impetus to growth, as new export orders rose at a softer pace.On the price front, the war in West Asia continued to exert pressure on cost burdens."Input cost inflation eased slightly on the month, and output price inflation slowed more sharply, suggesting a potential squeeze on manufacturers' margins," Bhandari said.Greater production requirements induced another round of job creation across India's manufacturing industry even though the rate of expansion was slower than in April.Business confidence remained positive, with companies hoping that cost pressures will fade later in the year. Advertising and strong order pipelines also supported optimism towards growth prospects.The HSBC India Manufacturing PMI is compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.