A key measure of German business optimism rose slightly more than expected in December.
The reading suggests that Europe's largest economy will avoid a recession despite a recent slowdown in growth.
The Ifo institute said today that its main index rose to 102.4 from 101.4 the month before. The consensus expectation among market analysts was 102.
The survey is a leading indicator, suggesting where the economy may be going in the months ahead.
It is based on a poll of 7,000 business executives about how they see things now and six months from now.
It is based on a poll of 7,000 business executives about how they see things now and six months from now. Their views about current conditions darkened, suggesting that the fourth quarter may see the economy shrink slightly.
But that was outweighed by brighter expectations for the future, suggesting that an outright recession, defined as two quarters of falling output in a row, is unlikely.
The German economy grew only a modest 0.2% in the third quarter from the previous three-month period, down from 0.3% the quarter before. Many economists think it will skirt with recession before growth improves next year.
Economists at UniCredit are predicting a 0.2% quarterly contraction in the fourth quarter, but noted that the Ifo results "signal the end of contraction" and that growth would strengthen next year.
A senior economist at Berenberg Bank said the brighter outlook would help growth as companies spend to expand production in anticipation of more business. "The confidence rebound should continue, gradually feeding through to GDP growth as companies start investing again," he said.
