german business confidence slides german business confidence fell in february knocking hopes of a speedy recovery in europe s largest economy.  munich-based research institute ifo said that its confidence index fell to 95.5 in february from 97.5 in january  its first decline in three months. the study found that the outlook in both the manufacturing and retail sectors had worsened. observers had been hoping that a more confident business sector would signal that economic activity was picking up.   we re surprised that the ifo index has taken such a knock   said dz bank economist bernd weidensteiner.  the main reason is probably that the domestic economy is still weak  particularly in the retail trade.  economy and labour minister wolfgang clement called the dip in february s ifo confidence figure  a very mild decline . he said that despite the retreat  the index remained at a relatively high level and that he expected  a modest economic upswing  to continue.  germany s economy grew 1.6% last year after shrinking in 2003. however  the economy contracted by 0.2% during the last three months of 2004  mainly due to the reluctance of consumers to spend. latest indications are that growth is still proving elusive and ifo president hans-werner sinn said any improvement in german domestic demand was sluggish. exports had kept things going during the first half of 2004  but demand for exports was then hit as the value of the euro hit record levels making german products less competitive overseas. on top of that  the unemployment rate has been stuck at close to 10% and manufacturing firms  including daimlerchrysler  siemens and volkswagen  have been negotiating with unions over cost cutting measures. analysts said that the ifo figures and germany s continuing problems may delay an interest rate rise by the european central bank. eurozone interest rates are at 2%  but comments from senior officials have recently focused on the threat of inflation  prompting fears that interest rates may rise.