German business confidence posted a surprise rise in September to levels last seen in June 2007 before the onset of the worst global slump since the 1930s Great Depression, a key survey showed yesterday.

The Ifo economic research institute said its business confidence index edged up to 106.8 points from 106.7 points in August, its 10th best reading since 1991, ING senior economist Carsten Brzeski noted.

“The German economy remains the showcase of the eurozone,” he said. The widely-watched reading of sentiment in Europe’s biggest economy had been expected to slip to 106.5 points, according to analysts polled by Dow Jones Newswires.

“Firms are again more satisfied with their business situation than in the previous month,” Ifo president Hans-Werner Sinn said in a statement.

In the manufacturing sector, sentiment slipped but the retail sector was more positive, with current situation assessed to be at its best since the boom that followed German reunification in 1990.

The outlook also perked up in the construction sector, raising the overall reading to levels not seen since the global financial system was slammed by a meltdown of the US market for high risk mortgages in mid-2007.