Industrial orders gained 3.5 percent on a monthly basis following a downwardly revised 3.8-percent rise in June, another sign the economy was rebounding from its worst recession in six decades.
The economy ministry, which had initially reported the increase for June as a much stronger 4.5 percent, said the latest result stemmed from an unusual number of big-ticket orders, namely for 405 armoured vehicles by the military.
Without the €3.1 billion that deal contributed, overall orders would have fallen slightly from the previous month's level.
Foreign orders for goods from Germany, one of the world's top exporters, did in fact fall by 2.3 percent in July while domestic orders surged 10.3 percent.
On a sliding two-month basis designed to smooth out volatility, industrial orders increased in June and July by 7.8 percent from the April-May period however, with both domestic and foreign orders climbing by the same amount.
Owing to the fresh increase in orders, "industrial production should increase over the entire third quarter," the ministry forecast.
"This bears out our view that the German economy should achieve strong growth in the second half of the year," Commerzbank analyst Simon Juncker added.
Figures for industrial output in July are to be released on Tuesday along with the German trade balance.
Germany was hit by the slump in global trade this year but is now poised to recover as activity picks up again in Asia and the United States, economists say.
Berlin posted an increase of 0.3 percent in gross domestic product (GDP) in the second quarter of 2009, following a contraction of 3.5 percent in the first three months of the year.
Two factors could curtail a sustained recovery however: rising unemployment and tighter credit conditions.
In its last report before a September 27 general election, the Federal Labour Agency said unemployment stood at 8.3 percent of the workforce in August, up from 8.2 percent in July.
ING senior economist Carsten Brzeski noted that stronger orders could limit a deterioration of the labour market, and added that "the outlook for the German economy looks bright as it can still benefit from the best of both worlds: stimulus-driven private consumption and blossoming industrial activity."
UBS counterpart Martin Lueck said: "Every month of better industry orders is good news, as this gives companies the chance to put some employees parked' in short-time schedules back to work, and/or renounce lay-offs."