Germany's economic outlook continued to improve beyond expectations in December amid an expanding foreign trade surplus and a stable labor market, according to latest survey data from research institute ZEW.

The economic sentiment indicator advanced to 10.7 points from minus 2.1 in November when it rebounded 20.7 points compared to the previous month. The consensus estimate of economists polled by Econoday was for a reading of 5.0 points in December.

The current German economic situation rose to minus 19.9 points from minus 24.7 points last month, coming in better than the Econoday consensus estimate.

The improvement in economic sentiment reflects higher-than-expected German trade surplus in October, robust third-quarter economic growth in the EU and a stable German labor market, ZEW President Achim Wambach said.

However, recent unfavorable figures for industrial production and incoming orders show that the economy is still "quite fragile," Wambach added.

The indicator for the current economic situation in the euro area also climbed to minus 14.7 points from minus 19.6 points last month.