Germany's leading economic institute has said it is still cautious about Germany's economic future despite the fifth consecutive monthly rise in business confidence.
The closely-watched Ifo index rose in September thanks to a jump in business expectations, but confidence about current conditions fell slightly, dampening hopes that the end of the German economic recession is near.
"Expectations improved markedly and are now for the first time since spring 2002 predominantly positive again," said Mr Hans-Werner Sinn, the President of the Ifo.
"However, the deterioration as compared to the previous month of the actual situation...calls for continued caution."
The Ifo index is compiled from surveys of 7,000 company managers, asking them to rate the outlook of orders and investment at the moment and for the next six months.
The overall index rose from 90.8 points to 91.9, its highest level since April 2001.
The index was driven up by managers' optimism about the next six months and a corresponding rise in the expectations index from 102.2 to 105.2.
However, the index for current conditions fell from 79.2 to 79.9. In eastern states, general business confidence fell marginally from 104.1 to 104.0.
There was caution among some of Germany's leading business men at yesterday's survey results. "When I look at our order books, I don't see the upturn. There are no signs of an upswing at the moment unfortunately," said Mr Jürgen Hambrecht, chief executive of the German chemicals giant BASF to Berlin's Tagesspiegel newspaper.
The index is unlikely to change much at the European Central Bank (ECB).
Outgoing president Mr Wim Duisenberg told EU finance ministers earlier this month that the euro zone economy will start to recover later this year, but would only next year reach its growth potential.
"The (Ifo) index sends a mixed message," said Mr Rainer Guntermann, an economist with Dresdner Kleinwort Wasserstein, to Reuters.
"We had been expecting a rise in the expectations component, but the decline in the current conditions component was disappointing and indicates that while hopes for recovery are still there, there are so far few signs that it will actually materialise," the economist said.
An Ifo rule of thumb suggests that three consecutive months of growth signal an economic upturn.
However, the gap between actual conditions and future expectations is a cause for concern and and thus a matter for caution for Ifo and leading economists.
In the first half of last year, they read too much into similarly optimistic figures, only to watch the German economy fall into its second recession in as many years.
