German business confidence likely to weaker in August

German's business climate indicator has in particular been held up by the strong assessment of current conditions. While expectations have been on a declining trend since March, a trend is likely to have continued in August as concerns over China increased.

"Therefore, expectations will be back close to the long-term average, while current conditions are still trending around one standard deviation above. In August, we expect the Ifo business climate index to decline to 107.8, from the surprise rise to 108 in July", states Societe Generale.

The current conditions is expected to remain resilient, although most likely weaken somewhat going forward, while expectations are likely to depend significantly on developments in China. Domestically, the outlook for economic growth remains favorable and should pull expectations back at some point, adds SocGen.