German business confidence fell from the highest levels in 27 years in February, as companies' assessment of the outlook for the months ahead turned less optimistic, the ifo Institute Center for Economic Studies said in its latest monthly survey.

The seasonally adjusted business climate index dropped to 115.4 points in February from 117.6 points in the previous month as survey participants expressed less satisfaction with their current business situation. Still, the indicator was at its second-highest level since 1991, indicating economic growth running at 0.7% in the first quarter, ifo said.

"After the euphoria of recent months, companies' assessments of the business outlook for the months ahead were also far less optimistic," Clemens Fuest, the institute's president, said.

The manufacturing index dropped to 28.0, compared to January's record 33.2. Manufacturers had slightly less favorable assessments of their current business situation although they remained at a high level, ifo said. Business expectations also declined as companies reported a slight slowdown in demand and lower orders.

Wholesalers and retailers also scaled back assessments of both the current business situation and expectations in February. The retail index fell to 11.0 points from 15.2 points while the wholesaling index declined to 20.6 points from 23.5 points.

The business climate index for the construction sector shed 1.8 points to 15.9 points. Construction companies lowered their expectations for the coming months. By contrast, assessments of the current business situation shot to a new record high.