The mood among German business leaders remains upbeat, pushing the Ifo index higher for the third consecutive month. The reading in July has set a new trend, suggesting brighter days for the economy.
The Ifo business climate index rose from 105.9 points in June to 106.2 points in July, the institute announced on Thursday.
The rise was the third monthly increase in a row, cementing the upward trend in German business mood since the beginning of the year, the economic research group announced.
Ifo's sentiment barometer is compiled from responses of about 7,000 German business leaders, and is considered an important indicator of the general state of the economy.
Analysts had predicted the gain in the index, but warned that slowing growth in China and the recession in the eurozone could prove a damper for the economy in the second half of the year.
Noting that the recovery was mainly driven by current business, DEKABank analysts Andreas Scheuerle told the Reuters news agency that there were too many uncertainties to become euphoric.
And Jörg Zeuner, chief economist of the state-owned KfW bank told the same news agency that the economy was not showing a clear trend yet, adding that full-year growth might reach just a meager 0.3 percent.
And, indeed, while executive assessments of current business edged up, expectations of future business fell slightly by 0.1 points, according to Ifo's subindex measuring future prospects.
Those were just very small clouds on the horizon, Ifo business cycle expert Kai Carstensen said in a statement.
uhe/mkg (AFP, dpa, Reuters)