BANGKOK Thailand's manufacturing production index (MPI) in May dropped by a less than expected 3.14% from a year earlier as exports remained sluggish, the industry ministry said on Friday.

The figure compared with a forecast in a Reuters poll for a fall of 4.5% in May. Output contracted a revised 8.71% year-on-year in April.

In the January-May period, the MPI declined 4.49% from a year earlier, the ministry said in a statement.

Last month, it forecast factory output would show zero to 1% growth this year.

While exports remain soft, domestic demand has increased, driven by strength in the crucial tourism sector and higher investment, it said.

Industrial goods account for about 80% of total customs-based exports, which dropped by a less than expected 4.6% in May from a year ago.

(Reporting by Orathai Sriring and Satawasin Staporncharnchai; Writing by Chayut Setboonasrng; Editing by Martin Petty)