Conversely, holdings of finished goods declined in July, but to the least extent in six months. Some respondents commented on the fulfilment of orders from stocks.

On the price front, July saw input costs rise at the slowest pace in five months. Although charge inflation accelerated, the rate of increase was only slight and remained below its long-run average. Finally, supplier performance improved for the first time since February, albeit marginally.

Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Economist at Markit and author of the report, said: "India's manufacturing economy is reviving at the beginning of the second half of 2016 after the slowdown seen in the April-June quarter, as growth of both production and new orders continues to Nikkei India Manufacturing PMI™ strengthen in July. Although output expanded at the fastest rate since March and backlog accumulation intensified, businesses refrained from creating jobs. The ongoing muted trend for employment indicates that companies remain somewhat uncertain regarding the sustainability of the upturn.

"Delving deeper into the data we see that the consumer goods sub-sector kept its place as the prime driver of the overall upturn. Although demand for plant   and machinery improved, investment goods output dropped. Separately, the depreciation of the rupee supported Indian exporters as survey data pointed to the quickest rise in new business from abroad since January.

"Offering respite to firms, cost burdens rose at a modest and slower rate and the improving demand environment meant that businesses were able to raise their own charges in July.

With inflation rates remaining lower than their respective long-run averages, it wouldn't be surprising to see the RBI loosening monetary policy at its August meeting in an effort to encourage investment."
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