A closely watched survey is showing a larger-than-expected fall in German business confidence this month, with managers' assessment of the outlook for the next six months darkening.

The Ifo institute said Monday that its monthly confidence index dropped to 107.3 points in January from 108.6 in December. Economists had forecast that it would slip to 108.4.

The decline to the lowest level in nearly a year was led by a drop in expectations for the next half-year. Managers' assessment of the current situation slipped only slightly.

Ifo's index is based on responses from about 7,000 companies in Germany, Europe's biggest economy.