FRANKFURT (AP) -- German machinery producers are not expecting a big upturn in output in 2010, as orders remain weak despite a recovery in the wider economy, an industry group said Thursday.

The Frankfurt-based VDMA group said 2010 machinery and factory equipment orders and production should be around 2009 levels, which are down about 20 percent from 2008.

The VDMA said that after five years of growth and a production volume of euro196 billion ($280 billion) in 2008, it sees production volume of just euro158 billion this year. It expects moderate job losses in the sector for the rest of the year.

"We anticipate that in the coming year the German machinery industry will be able to maintain the rather weak production levels of 2009," Manfred Wittenstein, the VDMA's president said in the group's report. "More than two-thirds of producers are complaining about a lack of orders."

Machinery production is a cornerstone of the economy of Germany, the world's biggest exporter, but demand has fallen sharply as the global economy weakened over the past year.

The group said that for the month of July, machinery and equipment orders were 43 percent below year-ago levels. Domestic demand was 41 percent lower, while international orders were 44 percent lower for the month. Production capacity in the industry stood at just 69 percent for July.

The group said that during the May-July period, orders were 46 percent lower than in the same period of 2008.

The VDMA said despite the weaker outlook for 2010, developing countries were playing a more important role for Germany. Machinery exports to China continued to grow during the first half.

"China has become our biggest foreign customer and has pushed the U.S to second place faster than expected," Wittenstein said.

He added that it was important for all customers to regain confidence in the economy and that banks also have to do their part and make it less difficult for customers to make capital investments.