German business morale deteriorated in September, falling for the fifth month in a row, a survey showed on Monday.
The Ifo institute said its business climate index stood at 85.7, a decline from a revised August figure of 85.8 but above the 85.2 forecast by analysts in a Reuters poll.
"The German economy is treading water," Ifo president Clemens Fuest said.
The institute's head of surveys, Klaus Wohlrabe, said a third-quarter contraction was likely.
The German economy is seen at risk of sliding into its second recession in a year after shrinking in the last quarter of 2022 and the first quarter of 2023.
Companies were less satisfied in September than in the previous month with their current business situation, with the sub-index falling to 88.7 in September from 89.0 in August.
But their pessimism regarding the coming months dissipated slightly, with the expectations sub-index recovering slightly, to 82.9 from 82.7 in the previous month.
Sentiment among German managers darkened further in services and construction, while it rose in manufacturing and trade, the survey showed. (Reporting by Friederike Heine and Maria Martinez, Editing by Miranda Murray and Catherine Evans)