Falling domestic demand weighed on Germany's key mechanical engineering sector in February, the VDMA industry federation said Wednesday.

The manufacture of machine tools is a key driver of German industry and exports.

In February, overall incoming orders fell by 3.0 percent compared with the same month a year earlier, VDMA said in a statement, with export orders stagnating while domestic orders slumped by 7.0 percent.

Making a three-month comparison to iron out short-term fluctuations, VDMA said overall orders rose by 4.0 percent in the period from December to February.

Foreign orders increased by 6.0 percent in the three-month period while domestic orders stagnated, VDMA calculated.

“Weak domestic demand shows that we mustn't allow ourselves to be dazzled by record exports,” said VDMA chief Thilo Brodtmann.