(Bloomberg) -- A slump in German business confidence deepened in June as trade tensions weighed on manufacturers.

U.S.-led protectionist threats have clouded the growth outlook in Europe’s largest economy for months, contributing to a manufacturing slump and boosting fears that domestic demand will be undermined. European Central Bank President Mario Draghi last week said he’ll inject fresh monetary stimulus for the euro zone unless the economy improves.

The drop in the Ifo index took the closely watched gauge to 97.4, its lowest level since late 2014. A gauge of expectations also worsened. The euro was little changed at $1.1377 at 10:04 a.m. Frankfurt time.

While Bundesbank President Jens Weidmann expects an improvement in Germany in the second half of the year as exports recover, the signs so far remain mixed. A purchasing-managers survey on Friday showed solid growth in services, but manufacturing remained in contraction. Investor confidence in the nation worsened dramatically this month.

Bechtle AG recently lowered its sales expectation for this year, citing the economic slowdown. Geopolitical uncertainties and trade restrictions also forced chip-maker Siltronic AG to curb its outlook.

Last week, Draghi told European Union leaders that a more expansionary fiscal policy may be needed should the euro-zone economy deteriorate.

--With assistance from Kristian Siedenburg, Catarina Saraiva, Harumi Ichikura, Carolynn Look and Alexander Kell.

To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow

©2019 Bloomberg L.P.