Fresh data on business sentiment in Germany have sparked hopes that Europe’s biggest economy may be on the path to recovery, while the latest figures from the UK have disappointed market insiders, says EU Observer.

The closely watched business climate index by the Munich-based Institute for Economic Research (Ifo) rose to 87.3 points in July on Friday (24 July), improving for the fourth consecutive time after reaching a seven-month high in June.

“Firms are not so unhappy with the current business situation as they were the previous month. Those surveyed are, again, less skeptical about the coming six months. It looks as though the economy is gaining traction,” the institute said in press release.

The index – based on a survey of 7,000 German executives – comes following statistics earlier this month which suggested that industry output in the biggest economy of the 27-member EU grew at its fastest rate in 16 years in May.

“Germany has all of a sudden become the leader of the pack, showing stronger signs of stabilisation than most other euro zone countries,” economist Carsten Brzeski at ING Financial Markets commented for Forbes.

The German economy shrank by 3.8 percent in the first quarter of this year, its worst quarterly performance since reunification in 1990.