Kansas City Fed manufacturing activity dropped into contraction in April with the composite index for current conditions falling to minus 10 in April from 0 in March and 0 in February. The index of six-month expectations for business conditions was unchanged at 3 in April from 3 in March and versus 1 in February.

For current conditions, the new orders index fell to minus 21 from minus 13 in March and minus 6 in February, a negative signal for the future. Production dropped to minus 21 from 3 in March and minus 9 in February. Prices paid rose to 32 in April from 30 in March and 26 in February. Prices received rose to 21 in April from 13 in March and 17 in February. The number of employees index fell to minus 1 in April from 18 in March and 11 in February.

The Kansas City Fed index offers a monthly assessment of change in the region's manufacturing sector. Positive readings indicate monthly growth and negative readings monthly contraction. Readings at zero indicate no change. The headline number is the composite index, an average of the production, new orders, employment, delivery time, and raw materials inventory indexes.

Investors track economic data like the Kansas City Survey of Manufacturers to understand the economic backdrop for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a moderate growth environment that will not generate inflationary pressures. The survey gives a detailed look at Tenth District's manufacturing sector, how busy it is and where it is headed. Some of the survey indexes also provide insight on inflation pressures—including prices paid, prices received, wages & benefits, and capacity utilization. The equity market is also sensitive to this report because it is an early clue on the nation's manufacturing sector, reported in advance of the ISM manufacturing index and often in advance of the NAPM-Chicago index.