The Bundesbank, Germany's central bank, described increasing optimism over the state of the country's economy in its latest monthly report published on Thursday.
Germany's gross domestic product (GDP), adjusted for inflation, is likely to rise again slightly in the second quarter, the bank said.
Although the German economy continues to face headwinds, there are increasing positive signs pointing to a recovery, the bank's experts wrote in the report.
In the first quarter, Europe's largest economy surprised with very modest growth of 0.2%, supported by exports and increased construction investments.
According to the Bundesbank, industry is slowly working its way out of its weak phase. Industrial production rose in April and demand from abroad in particular is showing signs of improvement - albeit from a low level.
Private consumption, which has helped prop up the economy through a period of contraction, could increase slightly in the current quarter, the Bundesbank forecast.
