MUMBAI, India (AP) -- India's industrial production surged a surprise 7.8 percent in June, the government said Wednesday, one more sign that the recovery of Asia's third-largest economy may be gaining momentum.

It was the best growth since February 2008 and more than twice as high as forecasters expected.

The government statistics agency said manufacturing output rose 7.3 percent over last June, with consumer durables production up 15.5 percent and capital goods production up 11.8 percent.

Economists say those numbers indicate that India's stimulus measures are working, with low interest rates, tax cuts and government spending boosting domestic demand enough to make up for slumping exports.

Car sales rose 31 percent in July and the Purchasing Manager's Index, a measure of factory production prepared by Markit Economics, has shown four months of increasing output.

Goldman Sachs said in a Wednesday report that growing consumption and investment demand, especially in infrastructure, may mitigate the negative impact of falling agricultural output from weak rains. Goldman has raised its growth forecast for the fiscal year ending in March 2011 to 7.8 percent from 6.8 percent.

India's economy grew 6.7 percent for the fiscal year ended in March, down from 9 percent the prior year and its slowest since 2003.

India's monsoon has been 25 percent below normal this year, with drought declared in 161 out of India's 625 districts. Agriculture accounts for 17.5 percent of India's GDP, and a weak harvest can lead to rising food prices and decreasing rural demand.

Sherman Chan, an economist with Moody's Economy.com in Sydney, said June's strong industrial production numbers "bode well for India's June quarter GDP performance."

"Compared with its trade-dependent neighbors, India's domestically oriented economy has suffered less damage during the global downturn," she said in an e-mail.

"India has ample room for infrastructure development, which could be a significant driver of industrial activity," she added. "The bid to narrow the urban-rural imbalance involves improving living conditions in rural regions and hence construction of infrastructure such as roads and railways."

The government also revised industrial output growth for May from 2.7 percent to 2.2 percent on Wednesday.