Germany's Ifo business climate index rose for the fourth month in a row to 90.8 in August from 89.3 in July, the Ifo institute said today.
The index performance exceeded analysts' forecasts and prompting hopes of economic recovery.
"The new survey data underline the Ifo forecast for an economic recovery in the second half of the year," Ifo President Mr Hans-Werner Sinn said in a statement accompanying the monthly survey of 7,000 firms.
The business conditions component of the index, which markets were closely monitoring as it gives an indication of what firms think about the current economic situation, rose by 1.2 points to 79.9 points for western Germany, while the expectations component was up at 102.1 from 100.2.
"Unlike other months the improvement was not just limited to expectations for the next six months, assessments of the current situation also improved," Mr Sinn said.