Germany's key Ifo business barometer fell by more than expected in July as firms' forecasts for future and current business conditions deteriorated.
The Munich-based Ifo economic institute said today its headline west German business climate index, based on a monthly survey of around 7,000 firms, fell to 89.9 from 91.3 in June.
The consensus forecast was for an unchanged reading but the result actually came in beneath even the lowest prediction.
"The decline in the business climate was particularly attributable to less favourable responses from manufacturing," Ifo president Mr Hans-Werner Sinn said.
The expectations index, which reflects companies' view of business six months ahead, fell to 102.5 from 104.9 points. The assessment of current business conditions worsened in July, with the index at 77.9 from 78.3 in June.
In east Germany, the main business climate index dipped to 99.6 after a June reading of 99.9.