Falling export demand dented Germany's key mechanical engineering sector in August, with rising domestic demand unable to offset the weakness, the VDMA industry federation said Wednesday.

The manufacture of machine tools is an important of Germany's industrial and export performance.

Overall incoming orders were down by 6.0 percent in September compared with the level in same month in 2012, VDMA said in a statement, with export orders tumbling by 16 percent while domestic orders grew by 21 percent.

The federation's chief economist Ralph Wiechers noted that the data had been distorted by a disproportionately large number of big-ticket orders from outside the eurozone in September 2012.

Taking a three-month comparison to iron out short-term fluctuations, overall orders slipped by 1.0 percent in the period from July to September, with foreign orders falling by 7.0 percent, while domestic orders rose by 11 percent, VDMA calculated.