Tue, Jan 05, 2016 - Page 13 News List

Absence of innovation weakens outlook

SMART AND FRIENDLY:After an initial weekend of record sales, new Apple Inc devices failed to impress consumers last year and manufacturers are feeling the bite

By Crystal Hsu  /  Staff reporter

The official manufacturing purchasing managers’ index (PMI) stood at 46.6 last month, up from 45.1 in November, as local manufacturers have yet to finalize inventory adjustments due to tepid external demand and the absence of any major innovations for technology devices, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

Operating conditions for the manufacturing industry have deteriorated over the past six months, and firms have dim business outlooks, the Taipei-based think tank said.

“Despite the easing pace of deterioration, the global slowdown has yet to bottom out judging from the latest data,” CIER president Wu Chung-shu (吳中書) told a media briefing.

The December data confirmed a disappointing year for Taiwanese firms’ exports and industrial output, both of which might drop to their lowest levels since the global financial crisis struck in 2008 to 2009.

The PMI seeks to gauge the health of local manufacturers, with scores above 50 signifying business expansion and values below the neutral mark indicating contraction.

The sub-indices on new orders and exports registered 45.7 and 43.8 last month, a small improvement from 44.9 and 45.7 in November, the monthly survey found.

Supply Management Institute in Taiwan (SMIT, 中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said he was not surprised at the results given the lackluster sales of Apple Inc’s iPhone 6S, iPad Pro and Apple Watch.

“Apple Watch failed to create a big splash and the iPad Pro failed to knock out laptops as the US technology giant had boasted,” Lai said, adding that iPhone 6S sales waned after first weekend sales hit a record high.

Smarter and friendlier innovations are necessary to impress users and local firms in the supply chain, Lai said.

Customers at home and abroad would refrain from active inventory building in the short term, as the first quarter is usually a slow season for consumer electronics sales, Wu said.

The slowdown in China might also raise uncertainty about the Lunar New Year demand, Wu said.

Caixin’s purchasing managers’ index for China came in weaker at 48.2 last month, down from 48.6 in November, according to a survey released yesterday.

In related news, non-manufacturing activity in Taiwan fared better last month when the NMI recovered to the neutral state with a 50 point, the CIER said.

The advent of the Lunar New Year next month and the government’s stimulus program helped shore up domestic demand, the institute said.

However, firms in services sectors are pessimistic about the landscape in the coming six months, with concerns poor exports could drag on businesses, Wu said.

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