India's manufacturing activity strengthened in July led by improved output and new orders, a private survey showed on Thursday.The Nikkei India Manufacturing Purchasing Managers' Index rose to 52.5 in July from 52.1 in June, remaining above the 50-point mark that separates expansion from contraction. Manufacturing growth has recovered some momentum but is still below long run trend levels, according to the report.“Following a slowdown in growth in the opening quarter of fiscal year 2019-2020, some momentum was regained in July,” said Pollyanna De Lima, Principal Economist at IHS Markit and author of the report.As per the survey report, consumer goods led the upturn in July, as it has done in the past two months through a pick-up in new orders, output and employment.Intermediate gooods producers, however, saw an even stronger improvement in business conditions while activity in the capital goods sector contracted with lower sales causing reductions in production and purchases and well as a halt on hiring.Growth was primarily driven by domestic demand with growth in export orders slowing to its lowest level in 15 months.Producers faced a slight growth in input costs in July led by higher prices of steel, chemicals, cotton and freight but overall inflation was at a three-month low.“The relatively negligible increases in input costs and output charges, signalled by the PMI survey in July, suggest that we will likely see a further reduction in India's benchmark interest rate as the RBI continues its effort to support economic growth." said De Lima.The Reserve Bank of India is expected to cut interest rates in August for the fourth meeting in a row, when its monetary policy committee meets from August 5-7.Measures for factory orders, production and employment improved in the latest month, although rates of expansion remained below trend, the survey report showed.Manufacturers’ confidence levels hit a four-month high in July with producers expecting demand to grow through their marketing efforts.