The Richmond Fed manufacturing composite index showed a similar pace of contraction in business activity at minus 9 in July versus minus 8 in June and minus 10 in May.

New orders, the forward-looking indicator, came in at minus 20 in July versus minus 16 in June and minus 24 in May. Shipments were at minus 6 in July, minus 5 in June and minus 6 in May. Employment improved to 5 in July from minus 1 in June and 5 in May. Wages rose to 19 from 17 in June and 19 in May.

Prices paid were at 4.07 in July versus 4.56 in June versus 4.81 in May. Prices received registered 4.01 in July versus 4.56 in June and 4.91 in May.

Richmond Fed's manufacturing index in July is not expected to emerge from six prior months of contraction, at a consensus minus 8 versus minus 7 in June.

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.