BERLIN (REUTERS) - German industrial orders fell at their sharpest rate in more than two years in February as they were hit by a slump in foreign demand, compounding worries that Europe's largest economy had a weak start to the year.

Contracts for German goods slumped by 4.2 per cent, data from the Economy Ministry showed on Thursday (April 4). That compared to a fall of 2.1 per cent in January, revised from a drop of 2.6 per cent.

The unexpected fall was the sharpest since January 2017 and confounded forecasts for a 0.3 per cent increase.

"Awful new order data suggests that German industry is still suffering from Brexit woes and global uncertainties," said ING economist Carsten Brzeski.

Concern about the weakness of the manufacturing sector is clouding the outlook for Germany's economy, which faces headwinds from a slowing world economy, international trade disputes and the threat of Britain leaving the European Union without a deal.

"In the coming months, a subdued industrial economy is to be expected, especially because of a lack of foreign demand," said the ministry in a statement.

Data showed that foreign orders were down 6.0 per cent in February, with a 7.9 per cent drop from non-euro zone countries and a 2.9 per cent decrease within the euro zone. Domestic contracts slipped by 1.6 per cent.

Germany's leading economic institutes have cut their 2019 growth forecast for Germany to 0.8 per cent from a previous estimate of 1.9 per cent, two sources familiar with the report to be presented on Thursday told Reuters.