German business morale improved in July to its highest level in 13 months, a survey showed on Friday, although analysts warned the economic outlook remained weak.

Confidence among German businesses improved slightly at the start of third quarter as Europe and the US moved closer to a trade deal and Chancellor Friedrich Merz vowed to make the economy his No. 1 priority.

The increase was a sign of resilience against U.S. tariffs, though uncertainty kept any upswing in check.