The researchers base their optimism on the fact that the European Semiconductor Sales leading indicator went up 1.7 percent in August to 165.8, after an increase of 2.0 percent the previous month.
The index was set to average 100 in 2000.
The indicator is a forward-looking composite index that forecasts six months ahead, on average, business activity in the region for sales for semiconductors.
"This is the fourth consecutive month the growth rate of the leading indicator is positive. It has also passed the long-term growth rate for the region of 10.1 percent. When the six month growth rate is above this long term trend, the industry will head to expansion, when below, towards recession. This is the first time since August of 2004 that the six month growth rate is above the long term trend," commented Maria Simos, CEO of e-forecasting.com.
The lead time of the indicator is five to six months, so, Simos suggests, "business conditions should be changing quite soon."
Also adding to the optimistic forecast is that the semiconductor leading indicator's six month growth rate went up 12.7 percent in August 2009, after going up 9.6 percent in July. Consecutive negative values in the six-month growth rate predict an end to an economic expansion and the beginning of an upcoming recession, say the researchers.
e-forecasting's model relies on seven components that make up the leading indicator for semiconductor sales in the European market, all of which improved in August.
The criteria are : Productivity Barometer, US Manufacturing; Productivity Barometer, European Manufacturing; Non-EU Demand Prospects, Top-10 partner-countries; US Monetary Conditions, Yield Spread ; Change in Profit Margins, US Semiconductors; Orders to Inventories Ratio, US Electronics and European Short-term Interest Rates.
