India's manufacturing activity improved in July as S&P Global's Purchasing Managers' Index (PMI) rose to an eight-month high of 56.4.
In June, India's manufacturing PMI was at a nine-month low of 53.9. A reading above 50 indicates expansion in activity, while a sub-50 print is a sign of contraction.
This is the 13th consecutive 50-plus print for the manufacturing PMI.
"The Indian manufacturing industry recorded a welcome combination of faster economic growth and softening inflation during July," noted Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
"Output expanded at the fastest pace since last November, a trend that was matched by the more forward-looking indicator new orders."
July saw a "substantial" increase in total new orders for the manufacturing sector, as they rose the most since November and made up for the loss of momentum in June.
There was, however, a slowdown in foreign orders.
In what will be music to the ears of the Reserve Bank of India (RBI), there was better news with regard to prices.
Even as input prices continued to rise, they increased the least in 11 months in July. Similarly, prices charged by manufacturers for their goods rose the least in four months in July.
"Inflation rates, for both input prices and output charges, were most acute in the capital goods segment. The weakest rises were noted in the intermediate goods sub-sector," S&P Global noted.
The central bank's Monetary Policy Committee (MPC) is meeting this week and is widely expected to raise the repo rate by at least 25 basis points to combat high inflation, with the retail inflation print for June coming in at 7.01 percent.
On the hiring front, the situation was subdued, as 98 percent of firms chose to make no addition to their payrolls as there was no pressure on operating capacity.
"Another factor that constrained hiring activity was future uncertainty. Despite improving from June's 27-month low, the overall level of business sentiment was muted in the context of historical data. In fact, 96 percent of manufacturers forecast no change in output from present levels over the course of the coming 12 months," S&P Global said.
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