German industrial orders fell 7.4% in January, their biggest monthly fall in eight years due to a slump in domestic and euro zone demand.

However, Germany's economy ministry said it expected a rebound later this year. 

The slide runs against otherwise fairly buoyant readings on the region's economy and was almost three times greater than the Reuters consensus for a 2.5% fall. 

Economists were split in their interpretation of the data. 

Carsten Brzeski of ING Diba said even though the fall could be explained by seasonal effects and a technical correction after a December surge of 5.2%, the size of the drop suggests that German industry could be struggling to gain speed. 

"Today’s disappointing data is also a good reminder that the German industry is having more problems returning to full speed than buoyant sentiment indicators have been suggesting," he wrote in a note to clients. 

However, the economy ministry said the drop in January was expected after a strong fourth-quarter in 2016. The December increase in industrial orders was the highest since July 2014. 

The January data showed that domestic demand fell by 10.5%, and foreign orders by 4.9%, driven by a 7.8% fall in demand from the euro zone.

German business confidence was surprisingly upbeat in February and industry association VDMA yesterday reported a 9% overall increase on the year in engineering orders.