Manufacturing activity in the Kansas City Fed district contracted further in June as the Kansas City Fed composite index dropped to minus 12 in June from minus 1 in May and minus 10 in April. The index of six-month expectations for business conditions declined to minus 2 in June from positive 2 in May and 3 in April.

For current conditions, the new orders index was unchanged at minus 14 in June from minus 14 in May and versus minus 21 in April. Production was at minus 10 in June versus minus 2 in May and minus 21 in April.

Prices paid declined to 4 in June from 16 in May and 32 in April. Prices received were at 3 versus 16 in May and 21 in April. The number of employees index dropped to minus 12 in June from positive 7 in May and minus 1 in April.

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.