Finance & Business World

German industrial production unexpectedly held steady in March, ending a six-month slump and adding to signs that a recession in Europe’s largest economy has reached a trough.

Output was unchanged from February, when it slumped 3.4 percent, the Economy Ministry in Berlin said today. Economists predicted a decline of 1.3 percent, the median of 27 forecasts in a Bloomberg survey showed. The annual rate of decline slowed to 20.4 percent.

“It is very pleasant to see that the decline of production has temporarily come to an end,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “Output only stagnated because of the government’s car-wreckage premium and a construction surge following a tough winter. Still, orders and sentiment indicators are giving promising signals that the worst is behind us.”

Germany’s economy, which will probably contract the most since World War II this year, may benefit from a pick up in the global economy later this year. Factory orders rose in March for the first time since August, data showed yesterday, and business confidence rebounded from a 26-year low last month.

Exports unexpectedly increased for the first time in six months in March, the Federal Statistics Office said today. The government expects the economy to return to growth next year, forecasting a 0.5 percent expansion after a contraction of 6 percent in 2009.

Record Low

Chancellor Angela Merkel has pledged 82 billion euros ($109 billion) to stimulate growth and the European Central Bank cut interest rates to a record low yesterday. ECB President Jean- Claude Trichet said the bank unanimously agreed on a 60 billion- euro plan to buy bonds, stepping up its response to the slump.

Investment-good production rose 2.5 percent in March as a result of a 15 cash advance now.4 percent surge in car and car-parts output, the Economy Ministry said in today’s report. That was offset by a decline in basic and consumer goods. Construction output rose 7.6 percent from February.

Demand for manufacturing goods increased for the first time in seven months in March, boosted mainly by foreign bulk orders, the ministry said yesterday. German business confidence rebounded from a 26-year low in April.

Germany’s BASF SE, the biggest chemical company in the world, on April 30 reported profit that beat analyst estimates after shuttering factories to weather a global slide in demand. Earnings at Siemens AG, Europe’s largest engineering company, jumped after the company accelerated a cost-cutting program and tapped demand for transformers, turbines and medical scanners.

‘Rays of Hope’

“Certain rays of hope have emerged in the past two to three months with regard to a slight improvement of the overall environment,” Bundesbank President Axel Weber said on May 4. “However, a handful of rays of hope is not a reliable sign that the global economy is out of the woods. From today’s perspective, I don’t expect positive growth rates before the second half of next year.”

Munich-based Linde AG, the world’s second-biggest producer of industrial gases, said this week that it no longer is counting on higher 2009 profit and sales and will cut about 3,000 jobs this year. HeidelbergCement AG, the German cement maker owned by billionaire Ludwig Merckle, posted a first- quarter net loss of 63 million euros after global demand for construction slumped.

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