Turkish factory activity rose at the fastest pace in six months in July, as the lifting of pandemic restrictions had a positive impact on demand and production in the manufacturing sector, a survey showed on Monday.

The Purchasing Managers' Index (PMI) for manufacturing rose to 54.0 from 51.3 in June. This signals a solid improvement in business conditions, according to a panel from the Istanbul Chamber of Industry (ISO) and IHS Markit.

Turkey lifted nearly all COVID-19 restrictions in July, which led to an improvement in customer demand as evidenced by a marked increase in new orders, the panel said.

Firms were able to expand production volume for a second consecutive month due to the new orders, it said, while there was some evidence that the order growth had put some pressure on capacity.

Staffing levels and purchasing activity increased due to greater workloads, it said, adding that disruption of supply chains hampered efforts to secure inputs.

The rate of input cost inflation accelerated for a third straight month and was substantial, which the respondents linked to currency weakness and increases in raw material costs, the panel said.

In turn, firms raised their selling prices at a marked pace but slower than in the previous month.

"Latest PMI data pointed to a ramping up of output and new orders across the manufacturing sector as firms benefited from the loosening of COVID-19 restrictions and stronger customer demand," said Andrew Harker, economics director at IHS Markit.

"Firms showed themselves able to rebound quickly last year and appear to be on track to do so again, with sharper increases in employment and purchasing activity helping them to deal with rising workloads. With virus cases on the rise again, however, there may be concerns that growth plans could be hindered again in the months ahead."