India's manufacturing activity in July softened marginally in July to 57.7 from 57.8 in June, as per the S&P Global India Manufacturing Purchasing Managers' Index. A reading above 50 indicates an overall increase in factory output compared to the previous month. In May, the country's manufacturing output stood at 58.7.

According to the PMI report, during the month under review, the manufacturing output and employment expanded marginally as compared to the month-ago period. Cost inflationary pressures, however, remained relatively muted, says the PMI report.

The growth in new export business picked up to the fastest in nine months, since November last year. The month under review witnessed an expansion in production capacity by manufacturers aided by a sharp increase in new orders. Manufacturers were helped in their efforts to build stocks by speeding up deliveries from suppliers. Lead times were marginally shortened for the fifth month running. Output has increased continuously every month since July 2021, according to the PMI report.

In July, the firms added additional workforce, which was in line with that of May and June. "This expansion in capacity was not sufficient to prevent a further build-up in backlogs of work, however, given the strength of the rise in new orders. Outstanding business increased marginally for the nineteenth successive month," according to the PMI report.

"The Indian manufacturing sector showed little sign of losing growth momentum in July as production lines continued to motor on the back of strong new order growth. The pressure continued to come on capacity, prompting firms to expand employment solidly again, a trend that is likely to continue in the months ahead should demand remain strong," says Andrew Harker, Economics Director, S&P Global Market Intelligence.

"All in all, the Indian manufacturing sector has maintained its position as one of the star performers globally, bucking the trend of demand weakness seen in other parts of the world," he adds.

The rate of input cost inflation accelerated to a nine-month high in July but remained softer than the series average. Where input prices increased, the surveyed firms reported higher costs for raw materials, in particular cotton. These higher prices for raw materials coupled with rising labour costs, led firms to increase their selling prices. The rate of inflation was solid but eased to a three-month low, says the PMI report.

As per the report, firms generally expect demand to remain elevated over the coming year, supporting projections for growth of production. "There were some reports that customers had responded well to recent new order deliveries and were expected to commit to more over the coming months. Confidence was slightly lower than that seen in June but remained above the series average," says the report.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.