FRANKFURT (AFP) -- Investors in Germany are confident that the upturn in the eurozone's biggest economy will remain on track, despite the sharp rise in sales tax and possible repercussions from the cooling U.S. economy, a new survey showed.

The ZEW economic research institute's economic expectations index, based on a poll of 301 analysts and institutional investors, hit an 11-month high, rising by 7.5 points to plus 24.0 points in May, ZEW said in a statement.

The increase, which was in line with analysts' expectations, marks the sixth monthly rise in the barometer in a row since the index hit a 13-year low of minus 28.5 points in November.

The index is now at its highest level since June 2006, even if it is still below its historic average of plus 33.0 points.

"The recovery in Germany shows that the increase in value-added tax (VAT) and the slowdown in the economic growth in the U.S. have had little impact," said ZEW President Wolfgang Franz.

"Rising employment in all sectors of the economy and the brisk level of investments indicate that the recovery is sustainable," Franz said.

The government raised VAT by full three percentage points to 19 percent with effect from January 1 in a move slammed by critics as detrimental to growth.

But a whole raft of recent positive economic data -- including better-than-expected gross domestic product (GDP) for the first quarter -- suggest that the braking effect of the VAT hike has not been as significant as feared.

The all-important Ifo business climate index, which measures confidence among business leaders, rose sharply last month and is expected to maintain its upward trajectory this month as the strong euro, too, fails to kill off the current economic boom.

The ZEW indicator represents the balance between positive and negative expectations for the German economy over the next six months.

If most analysts and institutional investors polled believe the economy will improve, the index shows a plus. If most are expecting a deterioration, the index shows a minus.

ZEW also polls analysts and institutional investors about their assessments of the current situation.

And the so-called "current situation index" showed a further improvement, rising by 11.1 points to a record high of plus 88.0 points.

Analysts welcomed the latest ZEW numbers.

"All this suggests that the recovery is firmly on track despite the VAT increase and U.S. slowdown," said Thomson Financial analyst, Zaki Kada.

HVB economist Alexander Koch agreed.

"Not even the unprecedented three-point VAT hike appears to have had a substantial negative effect on the upswing," Koch said. "The outlook for continuing broad-based growth remains bright. We expect full-year growth to moderate only slightly to 2.7 percent this year from the outstanding 3.0 percent recorded last year."

Buoyant German growth also augured well for the eurozone as a whole, said Postbank economist Brian Mandt.

And that meant the European Central Bank would likely continue raising its key interest rates beyond the quarter-point rise to 4.0 percent anticipated by the markets next month, said Bear Stearns economist, David Brown.

"A move to 4.00 percent next month is almost a done deal and (the ZEW data) it tilt the odds to 4.25 percent by September as well," Brown said.

The ECB has raised eurozone borrowing costs a total seven times since December 2005, each time by a quarter of a percentage point.

Those tighter monetary conditions would begin to make themselves felt next year, said Commerzbank economist Matthias Rubisch.

"We're projecting German growth of 'only' 2.0 percent for 2008," Rubisch said.