It was a modestly upbeat sign for the largest economy in the 18-country euro currency union, which is struggling to grow.
The Ifo institute said Monday that its confidence index rose to 104.7 points in November from 103.2 points in October. Business leaders' assessments of their current situation and their expectations for the next six months both rose.
The German economy has been held back by slower demand in key export market China, and by worries about the conflict between Russia and Ukraine. Those concerns have helped depress business' willingness to invest in new production.
Germany's economy shrank 0.1 per cent in the second quarter but returned to growth in the third quarter with modest expansion of 0.1 per cent, avoiding recession. The eurozone as a whole grew by 0.2 per cent in the third quarter.
Jennifer McKeown, senior European economist at Capital Economics, said the Ifo survey reading was "a welcome surprise" that suggests a weaker euro and easing concerns over geopolitical turmoil were helping the economy.
Still, she said the Ifo "points to only slow growth."
Analyst Carsten Brzeski at ING wrote in a note to investors that "any swan songs on the German economy were premature." He said it was "still hard to tell whether solid domestic demand can offset weaker industrial activity."
The Ifo survey is based on responses from about 7,000 companies in various sectors about their views on the current and future business environment.
(An earlier version of this story incorrectly used an unrevised figure for second quarter GDP.)Suggest a correction