Taiwan's purchasing managers' index (PMI) for the manufacturing sector dropped by 1.1 points from May to 57.6 in June, a Taipei-based think tank said Tuesday.

Despite the drop, the PMI for the manufacturing sector had seen expansion for 16 consecutive months, according to the Chung-Hua Institution for Economic Research (CIER).

A PMI above 50 indicates expansion, while below reflects contraction.

Four of the five major sub-index saw drops compared with the previous month. The sub-index for production fell 2.7 points to 57.3 and that for employment was down 1.8 points to 58.6. Supplier deliveries and inventories also dipped slightly, while the sub-index for new orders gained 1 point to 58.3.

"The drop of PMI in June means the expansion pace of Taiwan's manufacturing sector slowed, but on the whole, the island's economy has witnessed recovery," said Wu Chung-Shu, president of CIER.

Wu said Taiwan's economy in the second half of 2017 might face uncertainties due to the fluctuation of the exchange rate, rising labor costs and increased raw material prices.

Meanwhile, the non-manufacturing index, an indicator for the service sector, fell 2.4 points to 53 in June.

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