The Federal Reserve Bank of Richmond reported its manufacturing sector fell further into contraction in January with the Richmond Fed composite manufacturing index at negative 15 versus negative 11 in December and negative 5 in November.

New orders, the forward-looking indicator, slipped to minus 16 from minus 14 December and from minus 5 in November.

Shipments came in at minus 15 in January versus minus 17 to in December and minus 8 in November.

Employment dropped to minus 15 in January from minus 1 in December and from 0 in November. Wages rose to 30 in January from 22 in December and 25 in November.

Prices paid were at 4.19 in January versus 4.24 in December and 3.08 in November. Prices received registered 2.80 in January versus 2.79 in December and 1.97 in November.

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.