Kansas City Fed manufacturing activity remained barely contractionary in May as the composite index registered minus 1 versus minus 10 in April and 0 in March. The index of six-month expectations for business conditions was nearly unchanged at 2 in May vs. 3 in April and 3 in March.

For current conditions, the new orders index edged up to minus 14 in May versus minus 21 in April and minus 13 in March. Production was at minus 2 in May versus minus 21 in April and 3 in March. Prices paid eased to 16 in May from 32 in April and 30 in March. Prices received were at 16 versus 21 in April and 13 in March. The number of employees index rose to 7 in May from minus 1 in April and 18 in March.

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.