Kansas City Fed manufacturing activity contracted again in July as the KC Fed composite index registered minus 11, nearly unchanged from minus 12 in June, and down from minus 1 in May. The composite index of six-month expectations was minus 2 in July versus minus 2 in June and 2 in May.

For current conditions, the new orders index was at minus 20 in July versus minus 14 in June and minus 14 in May. Production was at minus 20 in July versus minus 10 in June and minus 2 in May.

Prices paid came in at 9 in July versus 4 in June and 16 in May. Prices received were at minus 7 in July versus 3 in June and 16 in May. The number of employees index rose to 4 in July from minus 12 in June and from 7 in May.

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.