Mumbai: Manufacturing activity in the country fell to a 28-month low in July, weighed down by a slower pace of output and export growth amidst a series of monetary tightening measures by the Reserve Bank of India.

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 based on monthly output, new orders, employment and prices of 500 companies.

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," said an official at ABN Amro India.

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.

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

In its latest increase in the cash reserve ratio RBI increased it by 50 basis points to 7.0 per cent, effective August 4.

Hiring by companies slowed, with the employment index easing to a three-month low of 50.3 in July from 50.8 in June.

While the input price index fell to its lowest in the survey''s 28-month history, the output price index rose to a seven-month high of 51.1 in July from 50.7 in June, the survey pointed out.