Economic sentiment rose in Germany during May, following on from a rise in April, the ZEW economic research centre reported on Tuesday.
The forward-looking ZEW indicator rose by 4.2 points to 47.1, beating analysts' expectations and coming in at the highest level since the Russian invasion of Ukraine in February 2022, the Mannheim-based institute said.
Analysts had predicted a rise to 46.4.
The ZEW's indicator on the assessment of the current economic situation in Germany also rose. The rise of 6.9 points took the indicator to minus 72.3. Analysts had forecast a rise to minus 75.9.
Confidence was increasing, ZEW President Professor Achim Wambach said.
"Following the stronger-than expected growth of the German economy in the first quarter of 2024, both the assessment of the current situation and economic expectations have become more favourable," he added.
Wambach said that signs of an economic recovery were increasing. This was being supported by better assessments of the overall eurozone and of China as a key export market.
He added that the increased optimism was being shown in the sharp rise in expectations for domestic consumption, followed by the construction and machinery sectors.