Taipei, Aug. 3 (CNA) Taiwan's manufacturing activity returned to expansion mode in July after three straight months of contraction, as new orders, production and employment improved significantly, the Chung-Hua Institution for Economic Research (CIER) said Monday.

CIER, one of the leading economic think tanks, in Taiwan, said its data showed that the Purchasing Managers' Index (PMI) for July rose 6.9 from a month earlier to 54.1, after June's 47.2.

In the service sector, the non-manufacturing index (NMI) rose by 3.3 from a month earlier to 57.3 in July, in the peak summer season. It was the first time since the COVID-19 pandemic started that both the PMI and NMI expanded in the same month, according to CIER.

For the PMI and NMI, readings above 50 indicate expansion or growth, while those below 50 represent contraction.

Among the five major factors in the PMI, the sub-index for new orders, production and employment rose 14.1, 13.0 and 6.5, respectively, from a month earlier to 56.7, 58.3 and 51.7 in July, the think tank said.

In addition, the sub-indexes on supplier deliveries and inventories rose 0.8 and 0.2, respectively, from a month earlier to 54.2 and 49.7 in July, CIER said.

As for the business outlook over the next six months, the sub-index rose 5.2 from a month earlier to 49.3 in July.

In July, all six major industries in the PMI -- chemical/biotech, food/textiles, basic raw materials, electricity/electrical equipment, transportation instruments, and electronics/optoelectronics industries -- improved, with the sub-indexes rising from a month earlier, CIER said.

While the July PMI rebounded strongly, however, the export-oriented manufacturing sector remained haunted by uncertainty due to a second wave of COVID-19 infections in many countries, CIER economist Chen Hsin-hui told reporters.

Also taking note of that factor, CIER President Chang Chuang-chang said there was no telling when the local manufacturing sector would return to the pre-pandemic era, as it is heavily dependent on foreign markets, where the reopening of the economy has been erratic, Chang said.

According to CIER, in Taiwan's service sector, the sub-indexes for business activity , new orders, employment and supplier deliveries rose 5.4, 2.1, 4.6 and 1.3, respectively, from a month earlier to 63.0, 59.5, 54.4 and 52.5 in July.