By Liam Moloney

ROME--Italian industrial orders fell in January pulled lower by foreign demand, reversing a strong climb in the previous month.

Industrial orders fell 3.6% on the month, reversing a 4.5% gain in December, national statistics institute Istat said Friday, using seasonally adjusted data. Foreign orders shed 9.0% from December, while domestic ones rose 0.7%.

Orders were 5.5% lower on the year in unadjusted terms, Istat added. Orders are a proxy for future industrial output, a key metric for Italy, which has Europe's second-largest manufacturing sector after Germany.

"Orders are lower after a very strong December; these are numbers can be very volatile," said an Istat official. "All you need is an order for a ship, a plane or helicopters to make the difference."

Industrial sales decreased 1.6% on the month in seasonally adjusted terms, with a 3.1% fall in foreign demand, Istat said.

Sales were 2.5% off on the year in workday-adjusted terms, led by a 3.7% decline in domestic demand, according to Istat.

Write to Liam Moloney at liam.moloney@wsj.com