New Delhi, Aug 1 (IANS): India's manufacturing activity continued to expand at a robust pace in July on the back of strong domestic demand and new export orders, according to an HSBC survey released on Thursday.

"With demand conditions remaining favourable and new orders coming in, goods producers purchased additional inputs in July," the survey highlighted.

The HSBC final India Manufacturing Purchasing Managers' Index (PMI) compiled by S&P Global, came in at 58.1 last month which was about the same as the June figure of 58.3.

The index has been above the 50-mark separating growth from contraction since July 2021 which is the longest expansionary phase in the last 11 years.

"India's headline manufacturing PMI showed a marginal slowdown in the pace of expansion in July, but with most components remaining at robust levels, the small drop is no cause for concern," Domestic demand recorded a healthy growth in new orders while exports rose at the second-fastest pace in 13 years driven by rising demand from countries in Asia, Europe, North America and the Middle East, the report states.

"New export orders remain a bright spot, rising by 1 point to the second-highest level since early 2011," said Pranjul Bhandari, chief India economist at HSBC.

The outlook for the coming 12 months remained optimistic with firms still taking on additional staff. While the pace of hiring was slower than in June, it maintained the positive momentum in creating new jobs, the survey states.

However, high demand pushed up both the input and output price sub-indexes. “The rate of expansion was sharp, as more than a quarter of panellists increased their buying levels. In turn, strong input demand drove cost inflation higher. Manufacturers reported paying more for coal, leather, packaging, paper, rubber, and steel,” the survey observed.

"The continuous increase in the output price index, driven by input and labour cost pressure, may signal further inflationary pressure in the economy," Bhandari said.