German business sentiment improved in November, a survey showed Friday, but analysts warned it was too early to sound the all-clear for the struggling economy.

The Ifo institute's closely watched confidence barometer, based on a survey of 9,000 companies, rose to 87.3 points from 86.9 in October.

Analysts surveyed by financial data company FactSet had expected 87.5 points.

"Sentiment among the German companies has improved slightly," said Ifo president Clemens Fuest, adding that "the German economy is stabilising, albeit at a low level".

Companies were less pessimistic than in October about the outlook for the months to come.

But they "still reported a lack of new orders", said Fuest.

For Capital Economics analyst Carsten Brzeski, the Ifo data points to a "bottoming out of the German economy, rather than an imminent rebound".

"It is too insignificant to celebrate," he said.

Pointing to the absence of growth factors, Brzeski said the risk that 2024 would be a recession year for Germany has clearly increased.

An ongoing budget crisis buffetting the government is adding to risks such as higher interest rates and the potential slowing of the US economy.

After being buffeted by surging inflation and an energy crisis, Germany is expected to finish the year in recession.

Official data released earlier Friday confirmed preliminary figures that the German economy shrank slightly in the third quarter.

The International Monetary Fund has predicted that Germany will be the only major advanced economy to shrink this year.