TAIPEI -- Taiwan's purchasing managers index (PMI) showed a slight increase in June, but still indicated a contraction of manufacturing for a third consecutive month, the Chung-Hua Institution for Economic Research (CIER) said on Wednesday.

The PMI for June rose by 2.4 percentage points to 47.2 percent, the CIER said in a press release.

A PMI above 50 suggests expansion of manufacturing activities, while below 50 means contraction.

The PMI dropped to 44.8 in May, the lowest since index figures were first released in July 2012.

Among the five sub-indexes, new orders, production and employment continued to contract in June, while supplier deliveries became slower and inventory levels shifted from expansion to contraction, according to the CIER.

Manufacturers in Taiwan have regained some confidence since new orders came in from the European and American markets due to the easing of the COVID-19 epidemic, the think tank said.

However, their businesses have not recovered to the levels seen prior to the epidemic, and uncertainty remains concerning how the epidemic will develop, it said.

For the services sector, the non-manufacturing index (NMI) rose by 8.8 percentage points from the previous month to 54 percent in June, ending the four-month contraction period, according to the CIER.

The CIER attributed the notable recovery to "retaliatory spending" among local consumers after major epidemic control measures were removed.

The momentum may not be sustained and it will take a longer time for local consumption to return to a normal level, it warned.