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.
"The weak domestic figures are a warning signal for politicians," he said.
The grand left-right coalition government under Angela Merkel was too focussed on consumption, and not enough on investment, Brodtmann complained, calling on Berlin to create "a climate for innovation."