Companies reported new contracts down 2.7 percent compared with June, federal statistics authority Destatis said, and 5.6 percent less than in July 2018 -- well below analysts' forecasts.

Leaving aside large orders for items like aircraft showed orders up slightly in July, adding 0.5 percent month-on-month.

Nevertheless, "new orders for industry have overall made a weak start to the third quarter," the economy ministry in Berlin acknowledged in a statement.

"Given still-smouldering international trade conflicts and restrained business expectations, there is no sign of a fundamental improvement in the coming months."

The effects of trade conflicts between the US, China and Europe were visible in the detailed breakdown of the orders data.

Domestic demand slid 0.5 percent month-on-month while foreign contracts dropped 4.2 percent.

Although countries in Germany's eurozone neighbourhood ordered slightly more from industrial firms, demand from the rest of the world slumped by 6.7 percent.

Makers of producer, consumer and capital goods all reported lower orders.

"The trend of industrial orders is anything but encouraging," ING bank economist Carsten Brzeski commented.

On average, the gauge has fallen by one percent month-on-month each month since January, he noted.

What's more, domestic orders have fallen further than foreign ones over the same period "suggesting that global woes have reached the domestic economy," he added.

"The combination of shrinking order books and high inventories suggests that the industrial slump will not be over any time soon," Brzeski predicted.