German industrial orders slumped in November by the most since the height of the financial crisis nearly three years ago, prompted by a sharp drop in demand from outside the euro zone.

Data from the economy ministry showed a 7.8 per cent fall in foreign orders drove a 4.8 percent drop overall month-on-month, the biggest decline since January 2009.

Orders from outside the euro zone dropped 10.3 per cent, while euro zone partners ordered 4.1 per cent less than in October.

Germany, Europe's largest economy, has weathered the euro zone crisis better than its currency peers but is beginning to feel the pinch, prompting the government, Bundesbank and research institutes to lower their 2012 growth forecasts.

The Bundesbank expects growth of 0.6 per cent this year, less than the government's official forecast of 1.0 per cent. Think tank IMK has even predicted a mild recession.

"The real economy is beginning to cool. Germany will not be able to decouple entirely from the rest of the euro zone, even though it looks like we will get through the... year better than other countries," said Mario Gruppe, analyst at Nord LB.

But some said not too much should be read into the number.

"There is no reason for panic. This is entirely a technical backlash that follows the strong rise in October," said Andreas Rees at Unicredit. "The German economy has merely shifted down a gear."

The drop in orders followed a strong 5 per cent rise in October but came after falls in July, August and September.

Reuters