German business sentiment rose for a third consecutive month in July, especially in the struggling industrial sector, and pessimism eased despite the ongoing war in the Middle East.
The Ifo institute's closely watched confidence barometer rose to 86.6 points in July, up from 85.7 points in June.
Analysts surveyed by FactSet had expected the indicator to remain flat.
This rise is driven by "a significant improvement in expectations," with less pessimism regarding the "uncertain situation" in the Middle East, Ifo said in a statement.
However, Philipp Scheuermeyer of KfW bank noted that some companies responded to the Ifo survey while a ceasefire agreement between the United States and Iran was still in effect.
