The Ifo Business Climate Index for industry and trade in Germany falls from 109.7 points in June to 108.0 points in July, marking a third decrease in succession, the Ifo institute reported here on Friday.

Ifo president Hans-Werner Sinn said that companies are also less optimistic about future business developments. "Assessments of the current business situation were less favorable than in June."

In fact, the index in June already fell to year-low level to 109.7, worse than the expected level of 110.3 points by experts.

The newly released report shows that all index figures see a fall in July.

The index in manufacturing fell considerably for a third month in succession. In wholesaling the index fell markedly after a strong month in June. The index in construction also fell after last month's slight recovery but remained at a high level, according to the Munich-based think tank.

"Geopolitical tensions are taking their toll on the German economy," Sinn explained.

The Ifo Business Climate Index, considered as the most important barometer for the German economy, is based on about 7,000 monthly survey responses from firms in manufacturing, construction, wholesaling and retailing.