/www.bloomberg.com/ By Christian Baumgaertel
Frankfurt, Jan. 13 (Bloomberg) -- German industrial production probably increased for the first time in three months in November, analysts said, after reports Friday showed demand from abroad rose.
Production at factories, construction sites, utilities and mines probably rose 0.6 percent from the previous month, according to the median forecast of 21 analysts surveyed by Bloomberg News. Production fell 1.3 percent in October.
Exports boosted factory orders and pushed the trade surplus to a record high in November. SAP AG, which sells most of its business-management software abroad, said Thursday 2002 sales gained ``slightly.'' Even so, business confidence fell to a 11- month low in December and unemployment reached a 4 1/2-year high.
``We will just avoid a recession,'' said Karsten Junius, an economist at DekaBank AG in Frankfurt. ``Exports are surprisingly strong. The problem is we can't get the domestic economy going.''
Retail sales fell the most in three years in November. Siemens AG, Metro Group and BASF AG were among the companies that last month said prospects for a global recovery are dim.
Germany, which accounts for about a third of the economy in the dozen nations using the euro, probably grew 0.2 percent last year, the weakest pace since the 1993 recession, economists expect a report Thursday to show. The single currency region may contract this quarter, the European Commission has said.
U.S. Economy
Demand in the U.S., destination of about a 10th of German exports, may revive after the Federal Reserve pared rates to a 41- year low of 1.25 percent and President George W. Bush proposed tax cuts worth $670 billion. Exports to the U.S., Germany's No. 2 trading partner, shrank 3 percent in the first 10 months of 2002.
The European Central Bank left borrowing costs unchanged at a 3-year low of 2.75 percent Thursday and signaled it's in no rush to reduce them. The bank last pared borrowing costs on Dec. 5, by half a percentage point.
``There is still a margin for maneuver to lower rates,'' said Christa Randzio-Plath, chairwoman of the European Parliament's monetary affairs committee, in an interview. ``Spring would be a good time.''
Investors expect cheaper money by June, interest rate futures trading suggests. The yield on the three-month contract maturing in June was 2.53 percent Friday, compared with a money- market rate of 2.84 percent.
Cheaper credit may be needed to bolster investment and spending. The country's six leading research institutes have pared their 2003 growth forecasts to as little as 0.6 percent, citing the effects of higher taxes and social security costs.
The government on Jan. 1 increased taxes on gasoline by 3 euro cents (3 U.S. cents) a liter and on electricity by 0.25 cents per kilowatt-hour, and raised pension contributions paid by companies and employees. Other steps included raising the rate of value-added tax on certain goods to the full 16 percent and cutting tax breaks for homeowners.