Confidence at German companies worsened less than expected in August, the Ifo survey showed this morning, but the institute's president said a recovery was still not on solid ground.
Munich-based Ifo's business climate index, based on a poll of 7,000 companies, fell to 95.3, the third decline in four months, from 95.6 in July, the institute said.
Economists had been expecting a bigger drop because of a recent surge in oil prices and doubts about the strength of the global recovery.
"The survey results indicate that the economic recovery is still not on solid ground," Ifo President Mr Hans-Werner Sinn said in a statement, adding that the business climate indicator declined in both eastern and western Germany.
"The business climate in three areas - manufacturing, wholesaling and retailing - worsened. Only in construction was there a slight improvement," he said.
An index gauging companies' assessment of their current conditions rose more than expected to 94.7 from 94.1, while a measure of their expectations declined more than expected to 96.0 from 97.1.
Analysts said earlier this week that Germany's export-fuelled recovery is in danger of receding in coming months as domestic spending remains too weak to compensate for a likely slowdown in the global economy.
Federal Statistics Office figures published on Tuesday confirmed GDP growth of 0.5 percent in the second quarter relied almost entirely on exports as private and public spending stagnated and capital investment declined.