German industrial orders dropped unexpectedly in September due mainly to weaker foreign demand, in a sign that Europe's biggest economy may loose steam at the end of this year. 

Contracts for "Made in Germany" goods were down by 1.7% on the month, the economy ministry said today. 

It is the first time since the summer of 2011 that orders have dropped for three consecutive months and compares with a Reuters consensus forecast for a rise of 1%. 

German factories received 2.4% fewer bookings from abroad, driven by a 6.7% slide in demand from euro zone countries, while domestic orders fell by 0.6%. Bookings from outside the currency bloc inched up 0.7%. 

Economists said the data signalled that a dip over the summer might have been more than a holiday-driven breather. 

They added that the emissions scandal engulfing car maker Volkswagen had not yet shown up in the data.

The only bright spot was slightly higher demand from non-euro zone countries, suggesting that the slowdown in China was having only a limited impact on German industry. 

In the less volatile three-month comparison, factory orders fell 2.8% on the quarter in the three months from July to September, with domestic demand inching up 0.3%, bookings from euro zone countries rising 0.9% and orders from countries outside the euro zone plunging 8.6%. 

"Overall, industrial orders are currently in a weak phase, mainly due to slow demand from non-euro zone states," the economy ministry said. It added, however, that business morale remained good with demand from domestic and euro zone customers still pointing upwards. 

The data comes after the BGA wholesalers and exporters body last week raised its forecast for export growth for 2015, saying demand from Europe and the US would offset weaker emerging markets and any negative impact from the VW scandal. 

Fitting into this picture, premium car maker earlier this week reported a surprise rise in third-quarter operating income as strong sales in higher-margin core European markets outweighed weak demand in China. 

The German government expects strong private consumption and higher state spending on refugees to drive growth in Europe's largest economy by 1.7% this year and by 1.8% next year.