FRANKFURT (AFP) -- Business confidence in Germany dropped slightly in September, although the fall was less than economists had expected, a widely watched business climate index showed.

The widely watched montly Ifo survey stood at 104.9 points in September compared with 105.0 in August.

It was the third fall recorded by Ifo in as many months, but analysts interviewed by the AFX financial news wire had predicted the index would fall by a greater amount, to 104.3 points.

"The results suggest that generally robust economic growth will continue, but we must expect a slowdown at the start of next year," said Ifo board member Gebhard Flaig.

The German economy faces a number of hurdles next year, starting with the introduction of a higher value-added tax, which is rising from 16 percent to 19 percent. That is expected to put the brakes on already weak consumer spending. Sylvain Broyer, an analyst at IXIS, said: "The peak of business confidence appears to be behind us and a bigger fall should come in the next few months."

The latest fall for the Ifo index came after the economic expectations index calculated by the Mannheim-based think-tank ZEW this month produced its lowest reading since January 1999.

To compile its monthly survey, Ifo polls around 7,000 companies about their assessment of current business and their expectations for the next six months.