German factory orders fell more than expected in July, official data showed Wednesday, in the latest setback for Europe's largest economy as it grapples with an industrial slowdown.

New orders, closely watched as a sign of future economic activity, plummeted by 11.7 percent compared with the previous month, federal statistics agency Destatis said.

The steep fall was mainly down to the comparison with June, Destatis said, when the indicator leapt by a surprising 7.6 percent on the back of several large orders including a major one in the aerospace sector.

Analysts surveyed by financial data firm FactSet had expected a smaller July decline of 3.5 percent.

Excluding large-scale orders, industrial orders would have risen by 0.3 percent in July, Destatis noted.

The monthly data "fluctuates strongly due to large orders", the economy ministry said in a statement.

"However, in view of the gloomy business climate and the weak global economy" there was no indication of "a sustained revival of industrial activity", it added.

Foreign orders fell by 12.9 percent in July, while domestic demand was down 9.7 percent.

The German economy is struggling to recover from a winter recession, and a string of weak economic data recently has added to fears that Europe's export powerhouse may face a prolonged period of subdued growth.

Germany's crucial manufacturing industry in particular has been hit hard in recent months as high inflation, elevated energy costs and weaker demand from key market China take their toll.

The country's economy stagnated in the second quarter of 2023, following two previous quarters of contraction.

Germany is only the major advanced economy expected to shrink in 2023, according to the International Monetary Fund.