India's manufacturing sector growth hits 4-month high in July

India's July manufacturing PMI extended its uptrend, improved marginally to 51.8 in July from 51.7 in June, driven by stronger output and new order growth. Total new business in the manufacturing sector rose at the fastest pace since March, supported by greater demand from both domestic and external markets.

“India’s manufacturing economy is reviving at the beginning of the second half of 2016 after the slowdown seen in April-June quarter, as growth of both production and new orders continues to strengthen in July,” Pollyanna De Lima, Economist at Markit and author of the report, said.

However, backlog accumulation intensified, businesses refrained from creating jobs. Only 1 percent of surveyed companies added additional work force in July, while almost all the remaining respondents signalled no change in payroll numbers. Prices also remained muted, giving room to the central bank to ease policy further if needed.

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