The indicator for business confidence in the German service sector rose to 34.8 balance points in November from 32.3 balance points in October, the research institute Ifo reported on Thursday.
The surveyed companies gave significantly more favorable assessments of the current situation, according to the report.
However, their expectations for the coming months have been downgraded slightly.
Ifo president Clemens Fuest said that the firms plan further to recruit more employees.
The Ifo business survey of the service sector is based on about 2,500 monthly survey responses from firms in key segments of the tertiary sector.
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