WASHINGTON (AP) — Businesses likely increased their orders to U.S. factories in June although a key category that signals business investment plans likely fell.

Economists expect factory orders rose 0.4 percent in June, according to a survey by FactSet. The Commerce Department will release the new report at 8:30 a.m. Eastern time on Thursday.

In May, factory orders rose 0.9 percent. The new report will provide details on orders for durable goods, manufactured products expected to last at least three years, and nondurable goods such as food, chemicals and paper.

A preliminary report last week showed durable goods orders rose 1.6 percent in June, an increase that was powered by a big gain in volatile aircraft orders.

Core capital goods, a category considered a proxy for business investment spending, fell 1.4 percent, the third decline in this key category in four months.

While manufacturing has helped drive overall economic growth since the recession ended three years ago, it has slowed in recent months, along with the broader economy.

Europe's financial crisis has lowered demand for U.S. exports. Export demand is also threatened by economic slowdowns in big emerging markets such as China.

The Institute for Supply Management reported Wednesday that U.S. manufacturing shrank in July for a second consecutive month. Its index of manufacturing activity dipped to a reading of 49.8 in July, down from 49.7 in June. Any reading below 50 indicates a contraction in manufacturing. June was the first month the survey had shown manufacturing contracting in three years.

In addition to weakness in exports, U.S. consumers and businesses have slowed spending, lowering demand for factory goods Economists are concerned that the weakness in manufacturing is not a good sign for economic growth in the second half of this year.

Overall economic growth slowed to an annual rate of just 1.5 percent in the April-June quarter, down from an already lackluster 2 percent growth rate in the January-March quarter.

The Federal Reserve cited the weaker growth in a statement Wednesday in which Fed officials repeated a pledge to try to boost growth in hiring remains weak. The Fed statement noted that growth has slowed in the first half of the year with job creating slackening and consumer spending tapering off.

Many economists believe the Fed will launch another round of bond buying at its September meeting in an effort to give the economy a boost by pushing long-term interest rates lower.