GERMAN industrial orders showed a 3.5 percent monthly increase in July on stronger domestic demand, the Economy Ministry said yesterday, suggesting the worst of a global slump in demand may be past.

The ministry said the increase followed a 3.8 percent monthly jump in June and was the result of more large orders. Domestic orders increased more than 10 percent, while foreign orders fell 2.3 percent in July.

Orders for product components rose 5.2 percent while orders for bigger, capital investment goods gained 3.2 percent.

Orders for automobile parts producers, meanwhile, declined 5.4 percent while consumer goods producers saw a 1.5 percent fall.

In a two-month comparison, the June-July period saw industrial orders rise 7.8 percent versus the April-May period, with both domestic and foreign orders up. In the June-July period, product components saw an 8.4 percent rise in orders while capital investment goods climbed 8.8 percent. Consumer goods orders in the June-July period added just 0.2 percent.

However, compared to the year-ago period, orders for the June-July period tumbled 23 percent, with domestic orders down 19 percent and foreign orders shedding more than 25 percent.

"On the basis of the clearly higher orders, industrial production should also rise in the third quarter," the ministry said in its report.

In a separate report, the Federal Statistical Office said German production of iron and steel picked up in August compared with July, but still remains well below year-ago levels.

The Wiesbaden-based office said iron output rose 12 percent and steel production gained nearly 10 percent in August compared with July.

Production fell sharply versus a year earlier, however, due to the effects of the economic downturn over the past 12 months.

The office said German mills produced nearly 2 million tons of iron in August, a 28 percent decline from August 2008. Steel production amounted to 3.3 million tons, a 26 percent reduction from year-ago levels.