“The German economy is in a party mood,” Ifo president Hans-Werner Sinn said in a statement.
The Munich-based institute reported that its monthly “business climate for industry and trade” figure rose sharply between June and July – from 101.8 points to 106.2 points.
“This increase is the largest since German reunification,” Sinn said.
The monthly survey of 7,000 firms in manufacturing, construction, wholesale and retail also showed healthy rises in firms' expectations for the next six months.
The survey results came as daily Bild reported that just 10,000 workers at the country's biggest firms are still on the Kurzarbeit scheme, under which their work hours are reduced to avoid layoffs.
Among the 30 major companies that make up the Dax share index, the vast majority are no longer using the system, which was a pillar of Germany's response to the sharp economic downturn of 2008 and 2009.
At the high-point of the recession in May 2009, about 1.5 million workers at German firms were on the scheme.
The mechanism allows firms to put their workers on shorter hours during tough times, rather than lay them off. Taxpayers then make up part of the workers' lost salary.
Car maker Daimler, for instance, said it had all but wound up its Kurzarbeit programme.
“Other than a few exceptions, we ended Kurzarbeit on June 30,” human resources director, Wilfried Porth, told the paper.
At the high point of the crisis – Germany's worst downturn since World War II – some 41,000 workers at Daimler were on Kurzarbeit. A further 77,000 were on a smaller version of the scheme, taking an 8.75 percent cut in work hours and a corresponding cut in salary.
Indeed, the majority of workers still on Kurzarbeit are at one firm – truck-maker MAN, which has 8,000 employees on the scheme.
Deutsche Post has 124 Kurzarbeit workers, steel-maker ThyssenKrupp has 969 workers, while airline Lufthansa has 600 – all of them at its catering subsidiary LSG Sky Chefs. Engineering giant Siemens announced a week ago it would end its Kurzarbeit programme on July 31.