Orders for Made-in-Germany machine and tools increased in March thanks to strong demand from abroad, said the German Engineering Association (VDMA) on Wednesday.

In inflation adjusted terms, German machinery orders increased by 4 percent in March when compared with the same month of previous year, VDMA said.

Foreign orders jumped by 6 percent year-on-year, while orders from domestic market only inched by 1 percent.

"In March, foreign demand set the pace once again," said VDMA's chief economist Ralph Wiechers in a statement, "Domestic orders only slightly exceed its previous year's level."

In the three-month period between January and March, which was less affected by short-term fluctuations, orders for German machine and tools increased annually by 2 percent. During the period, foreign orders increase by 3 percent, while domestic orders decline by 2 percent.

VDMA warned earlier this month that domestic investment was disappointingly weak in Germany and the German government should create an encouraging circumstance for investment.

In its latest forecast for 2015 growth, the German government expected Europe's biggest economy to expand by 1.8 percent this year. Private consumption was seen as the main pillar for the growth. Investment, however, was expected to increase at a much slower pace than in previous year.