The Richmond Fed manufacturing composite index fell back more than expected to minus 11 in January from 1 in December and minus 9 in November. The Econoday consensus forecast looked for a more modest contraction to minus 3, with a survey range of minus 5 to plus 3.

New orders, the forward-looking indicator, showed the most notable decline to minus 24 in January from minus 4 in December, a harbinger of gloom. Shipments slipped into contraction at minus 3 from 5 in December. Employment also contracted at minus 3 in January from 3 in December. Wages stayed high at 41 vs. 37 in December, suggesting wage pressures remain elevated, an unpleasant data point for the Federal Reserve, which has focused on taming wage pressures.

Prices paid continued to rise at 7.9 in January from 9.1 in December. Prices received registered 6.5 in January vs. 7.6 in December.

Richmond Fed's manufacturing index, which rose 10 points in December to plus 1, is expected to ebb back into the negative column in January, to minus 3.

This survey tracks business conditions in the Richmond Fed's manufacturing sector. The headline index is a composite of the new orders, shipments, and employment indexes.

Investors need to monitor the economy closely because it usually dictates how various types of investments will perform. By tracking economic data such as the regional Fed surveys, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth so that it won't lead to inflation. These surveys give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since manufacturing is a major sector of the economy, this report has a big influence on market behavior.