German business sentiment dips less than expected in July - Ifo

German business confidence deteriorated a little in July, according to a widely-followed survey released on Wednesday, most likely due to worries about a trade war.

The Ifo business climate index fell to 101.7 from 101.8 in June, but was ahead of expectations for a bigger drop to 101.5.

Meanwhile, the current assessment index edged up to 105.3 from 105.1, beating expectations of a decline to 104.8.

The expectations index slipped to 98.2 in July from 98.6 the month before, but was ahead of the 98.1 economists had pencilled in.

The sub-index for manufacturing printed at 22.4 this month from 23.9, while the construction index rose to 27.4 from 19.4 and the service sector gauge increased to 26.7 from 26.0 in June. The trade index edged down to 10.4 this month from 11.4 in June.

Jennifer McKeown, chief European economist at Capital Economics, said the very small fall in the business climate index leaves it pointing to healthy growth, which will encourage the European Central Bank to maintain an optimistic tone when it meets on Thursday.

"The decline in the BCI reflected a deterioration in businesses’ expectations, possibly related to the threat of more tariffs. But the current conditions index actually rose, boding well for growth in the near term," she said.