German industrial orders fell less than expected in January with a spike in orders from euro zone countries cushioning a drop in demand from domestic customers, data showed on Monday.

The figures gave some relief after surveys had painted a gloomy outlook for manufacturing in Europe’s largest economy as exporters face trouble in major markets, such as an economic slowdown in China and recession in Russia and Brazil.

"This could have been worse in light of the bad news and turbulence on stock markets at the beginning of the year," said Dirk Schlotboeller, economist at Germany's DIHK Chambers of Commerce.

Orders for 'Made in Germany' goods were down 0.1 per cent on the month, the Economy Ministry said. That compared with a Reuters consensus forecast for a decline of 0.3 per cent.

Domestic demand fell 1.6 per cent while foreign orders rose 1 per cent, with orders from the euro zone up 7.5 percent.

The figure for December was revised up to a drop of only 0.2 per cent from a previously reported fall of 0.7 per cent.

“Over the two months, the impulses are from abroad,” the ministry said, adding that strong foreign demand showed the German industrial sector’s competitiveness.

“However, expectations in industry have become considerably overcast and signal only a modest economic upswing.”

Caution among buyers of German goods around the world has been forcing some manufacturers to postpone investments, threatening to drag German growth below the government’s 1.7 per cent forecast for this year.

Mr Schlotboeller ascribed the strong rise in orders from euro zone countries to the drop in oil prices, which had had the effect of a stimulus package.

“The real disappointment is the further decline of domestic orders,” Mr Schlotboeller added.

In 2015, robust private consumption and higher state spending on infrastructure and refugees drove an economic expansion of 1.7 per cent.

Reuters