© Reuters. FILE PHOTO: A view shows the logo of the European Central Bank (ECB) outside its headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker

BERLIN (Reuters) – German business morale unexpectedly rose in March, adding to signs that Europe’s largest economy is stabilizing despite recent turmoil in the banking sector, a survey showed on Monday.

The Ifo institute said its business climate index jumped to 93.3 from a reading of 91.1 in February. A Reuters poll of analysts had pointed to a March reading of 91.0.

The increase in business morale for the fifth month in a row was driven primarily by business expectations, Ifo said.

The expectations index rose to 91.2 in March from a revised 88.4 the month before, its highest level in at least a year.

Commerzbank (ETR:) chief economist Joerg Kraemer welcomed the increase, but warned that the European Central Bank’s interest rate hikes take at least a few quarters to have an effect, which argues against an economic recovery in the second half of the year.

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