The Munich-based Ifo economic institute's business climate index, based on a monthly survey of some 7,000 firms, jumped to 109.0 from 108.2 in October.
The reading was the strongest since June 2014 and compared with the Reuters consensus forecast for a reading of 108.2.
The survey was conducted in the first three weeks of November, with most responses coming in before the militant attacks in Paris on Nov. 13, an Ifo spokesman said.