The purchasing managers' index (PMI) for Taiwan's manufacturing sector dropped by 3.2 percentage points from November to 44.8 in December, the lowest reading index since July 2012, a Taipei-based think tank said Wednesday.

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

All the five major sub-indices saw drops compared with the previous month, according to the Chung-Hua Institution for Economic Research.

The sub-index for new orders fell 5 percentage points to 42.6 and production was down 6.1 percentage points to 43.1.

The sub-index for employment decreased 1.6 points to 47.7 while the sub-index for supplier deliveries and inventories dipped to 45 and 45.8 respectively.

Meanwhile, the non-manufacturing index, a service sector indicator, edged up 4.8 points to 54.2 in December.