German business confidence rose unexpectedly in May, data showed on Friday, as businesses in Europe's top economy express satisfaction with their situation and become more optimistic about the future.
The Ifo economic institute's closely watched business climate index rose to 105.7 points in May from 104.4 points in April. Analysts had been expecting an unchanged reading this month.
"The Ifo business climate index has risen again after two consecutive declines," said the think-tank's economist Kai Carstensen.
"The firms are clearly more satisfied with their current business situation than in the previous month. The outlook for future business is unchanged and slightly positive," he said.
"The German economy remains on track in a challenging European environment."
Ifo calculates its headline index on the basis of companies' assessments of their current business and the outlook for the next six months.
The sub-index measuring current business jumped to 110.0 points in May from 107.2 points in April. And the outlook sub-index was unchanged at 101.6 points.