"The economic recovery continues," Ifo director Clemens Fuest writes in a press release.
The Ifo index rose to 91.6 in October, up from 90.4 in September. Analysts had forecast a slight decline to 90.0 in October.
At the same time, a sub-index measuring views of the current situation deteriorated slightly, contrary to expectations.
The German government recently raised its growth forecast for 2026 to 1.3 percent, despite inflation problems and heat waves that have hit the transportation system hard.
The German economy is growing largely thanks to major investments in infrastructure, defense and AI.