German business morale grew more than expected in August, a survey showed on Tuesday, adding to signs that Europe's largest economy is on track for a long-awaited recovery.
The Ifo institute said its business climate index rose to 88.8 in August from a slightly upwardly revised 86.7 in July.
Analysts polled by Reuters had forecast an increase to 87.2.
"Despite the renewed rise in energy prices, the German economy is recovering," Ifo President Clemens Fuest said.
Germany's gross domestic product grew by 0.3% in the second quarter of 2026 compared with the previous quarter, slightly above last month's preliminary reading of 0.2%, statistics office data showed on Tuesday.
This data, together with Ifo's increase, further firms up tentative signs of a recovery in Germany's languishing economy, following a stronger-than-expected rise in investor morale last week, as well as exports and industrial production that beat expectations in June.
Economic expectations in the Ifo survey also rose, to 89.1 in August from 86.8 in July.
Companies were more satisfied with their current business performance, with the index rising to 88.5 in August from 86.5 in July.
Business sentiment improved across all economic sectors, the survey showed.
(Reporting by Maria Martinez. Additional reporting by Cian Muenster. Editing by Miranda Murray)
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