London, Dec. 2 (Bloomberg) -- European manufacturing shrank at a slower pace in November amid signs a recovery in the U.S. is spurring demand for the region's exports. An index based on a survey of purchasing managers at 2,500 companies for Group Plc rose to 49.5 last month from 49.1 in October. A reading below 50 indicates a contraction. German export orders rose to the highest in almost two years. European producers are dependent on the U.S., destination for a quarter of its exports, as the region's economy expands at the slowest pace in almost a decade. The European Central Bank will probably lower interest rates for the first time in more than a year in an effort to boost the faltering recovery. Clients ``are ordering again and we're hoping that means there will be a recovery next year,'' said Giovanni Dell'Aria Burani, chairman of Reno de Medici, Italy's biggest cardboard maker. ``When growth is slow, low interest rates encourage investment.''
Manufacturing is rebounding in the world's No. 1 economy. In Europe, a separate index of new orders climbed to the highest since August. German exports to the U.S. climbed 11 percent in September, the most recent figures available, compared with an increase of 6.4 percent in shipments to the euro region. DaimlerChrysler AG's Chrysler unit will be profitable this quarter and may increase spending on marketing, Chrysler Chief Executive Officer Dieter Zetsche said in an interview last week.
U.S. manufacturing probably expanded in November for the first time in three months, analysts said in advance of a report by the Institute of Supply Management. The ISM's index probably rose to 51.0, from 48.5 in October, economists said. The survey will be released at 3 p.m. London time. Slower Economic Growth
The economy of the countries sharing the euro will expand 0.8 percent this year, the European Commission, the executive branch of the European Union, predicts. That's the slowest pace in nine years and follows growth of 1.5 percent in 2001. ``It gets worse day by day in Europe,'' said Wolfgang Reithofer, the CEO of Vienna-based Wienerberger AG, the world's biggest brickmaker. ``The forecasts have been reduced constantly, from quarter to quarter, from month to month.'' The ECB will probably cut its benchmark interest rate by as much as half a percentage point to 2.75 percent, the lowest in three years, according to the median forecast of 30 economists surveyed by Bloomberg News. Policy makers meet on Dec. 5. Stocks gained. The Dow Jones Stoxx 50 Index added 1.4 percent to 2693.13 at 11:46 a.m. London time. The Stoxx 50 is down 29 percent this year.
Dependent on U.S.
In the U.K., growth in manufacturing stalled last month. The Chartered Institute of Purchasing and Supply's index dropped to 50, the lowest since July, from 60.6 in October. Nordex AG, a German maker of windmills, said 2002 earnings didn't ``quite'' meet the company's target, citing project delays and start-up costs for a new rotor series. It predicted ``strong demand'' for next year. Economic recovery in Europe will depend as much on the U.S. economy as on lower borrowing costs in Europe, investors said. ``A rate cut will help, but it won't be the only factor,'' said Jaime Hoyos, who helps manage 500 million euros ($496 million) at Indosuez Fondos SA in Madrid. ``The U.S. continues to be the clear reference, both for growth and for financial markets.'' Recent reports from the world's largest economy point to accelerating growth. U.S. consumer spending gained 0.4 percent in October, the biggest increase in three months, and orders placed with factories rose 2.8 percent in the month.//www.quote.bloomberg.com