BERLIN (AP) -- German business confidence unexpectedly rose this month, posting its third straight increase despite the near-record strength of the euro and some concern over the future outlook, a closely watched survey showed Wednesday.
The Ifo institute's index rose to 104.8 points for March from 104.1 in February. Economists surveyed by Dow Jones Newswires had forecast that the index would decline to 103.4 points.
''These results indicate that with the beginning of the year the German economy has gained strength,'' Ifo president Hans-Werner Sinn said in a statement.
Managers' assessment of their current economic situation improved for a second consecutive month, with a subindex that increased to 111.5 points from 110.3.
Their outlook for the next six months also was marginally better after a fall in February, with that subindex improving to 98.4 points from 98.2.
The overall climate improved in the manufacturing sector, where managers' assessment of their current situation improved while their six-month outlook ''weakened only marginally,'' Sinn said.
The high value of the euro, which makes European goods more expensive overseas, and fears about a U.S. recession and global slowdown, have raised concern over exports, which have been a key driver behind Germany's economic surge.
''Despite the strong euro, the firms are more optimistic regarding exports than they were in February,'' Sinn said. ''Their hiring plans indicate that the increase in staff levels will continue in the coming months.''
Ifo said managers in the construction and wholesale industry were more confident this month, but the climate worsened slightly in the retail sector following a strong rise in February.
The unexpectedly bright Ifo reading comes after another closely watched indicator, the ZEW institute's index of investor confidence, also defied forecasts to rise for a second consecutive month in March.
Economist Andreas Rees at UniCredit in Munich forecast that ''backlog orders and demand from emerging markets will act as a buffer, making robust industrial activity in the months ahead very likely.''
''But we do not believe in an outright 'Superman scenario' in 2008,'' Rees added in a research note. ''Instead, it is a question of time -- the plunging U.S. economy and the stronger euro exchange rate will leave their trace on the German economy in the second half of this year.''
Rees said he was sticking to a forecast of 1.8 percent economic growth this year -- down from 2.5 percent in 2007.
Munich-based Ifo based its survey on responses from some 7,000 firms.