German business confidence rose to a new high in January, a survey has shown, taking analysts by surprise.
The Ifo think tank said its Business Climate Index rose to 110.3 in January from a revised 109.8 in December.
That marked the third month in a row where the index has hit a new high, since records began for a reunified Germany in 1991.
Ifo said that manufacturers, especially exporters, were the most optimistic but retailers and wholesalers were less so.
Most economists had expected sentiment among the 7,000 businesses surveyed to remain flat.
"Boldly going where no Ifo has gone before. German business confidence surprised and continued its impressive performance of the last two years," said Carsten Brzeski from ING.
"German fundamentals are currently simply too strong to derail the recovery any time soon. The diversified export mix, the labour market and a further strengthening of private consumption should put growth in 2011 on a broad footing."
Andreas Scheuerle from Dekabank also welcomed the news: "We've never been as close as this to a self-sustaining upturn. The only thing missing now is a strong upturn in private consumption. But the chances for that are good as well."