In July, the German IFO business climate indicator fell back from 114.5 to 112.9, below the consensus, which was looking for a decline to 113.7. The details show that the downward surprise was due to a significant worsening in sentiment about the current assessment (121.4 from 123.3), off from the record highs. But also the forward looking index showed a worsening in sentiment, dropping from 106.2 to 105.0, which was in line with expectations. The decline in the IFO business climate indicator is no surprise, as the other business confidence indicators suggested already a few months that growth is slowing, also in core EMU countries. Nevertheless, current conditions remain at strong levels, but German businesses are cautiously looking forward as the global economic slowdown will probably hit German exports too.