Indian Manufacturing Growth 28-Mth Low In July - PMI

Indian manufacturing activity fell in July to its lowest level in 28 months, weighed down by a slower pace of output and export growth as a series of recent monetary tightening measures worked through the economy.The ABN Amro Bank purchasing managers'' index (PMI) fell to a seasonally adjusted 52.9 in July from 53.2 in June. It was the lowest reading since the series began in April 2005.

The PMI, compiled by UK-based NTC research and sponsored by the Dutch Bank, tracks changes in manufacturing business conditions by polling 500 companies each month on output, new orders, employment and prices.A reading above 50.0 signals expansion while readings below 50.0 suggests contraction.Slowdown in the manufacturing sector is becoming more pronounced now and the PMI falling to its lowest level in 28 months corroborates that, Gaurav Kapur, senior economist at ABN Amro in India said.

The PMI hit a peak of 59.3 in October 2006. It has been declining since then as the central bank took a raft of monetary steps to cool price pressures in Asia''s third-biggest economy.

The new orders index eased to 55.7 in July from 55.8 in June. The new export orders index fell to a three-month low of 51.3.

The output index fell to 54.2 in July, a four-month low.

This suggests that both domestic as well as export demand is moderating, Kapur said.

The central bank has raised its key lending rate five times since June 2006, and jacked up banks'' cash reserve ratio four times since December.