NEW DELHI: Manufacturing output in India grew at its fastest pace in four months in July, a private survey showed Monday, indicating a further improvement in overall business conditions across the sector.

The seasonally adjusted Nikkei India Manufacturing Purchasing Managers Index edged higher in July, at 51.8 compared with 51.7 in June.

A reading above 50 on the index denotes expansion.

“The performance of India’s manufacturing economy continued to improve in July, with a stronger expansion in new business contributing to faster increases in output and buying levels,” said the survey report.

Supported by greater demand from both the domestic and external markets, total new business rose at the fastest pace since March.

“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 strengthen in July,” said Pollyanna De Lima, Economist at Markit and author of the report.

The survey found that Indian manufacturers stepped up production, with July’s upturn being the most pronounced since March.

Despite this, hiring trends remained relatively muted. Only 1% of surveyed companies took on additional workers in July, while almost all the remaining respondents signalled no change in payroll numbers.

The encouraging data has come a week before the RBI’s monetary policy review meeting on August 9.

“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,” De Lima guided.