The contraction in manufacturing business activity in the Federal Reserve Bank of Richmond's district has deepened again with the Richmond Fed's composite manufacturing index at minus 19 in August, down from minus 17 in July, minus 10 in June and minus 2 in May.

New orders, the forward-looking indicator, slipped again to an even bleaker minus 26 in August from minus 23 in July and minus 16 in June. Shipments came in at minus 15 in August versus minus 21 in July and minus 9 in June.

Employment has started to crack as it dipped to minus 15 in August from minus 5 in July and minus 2 in June. Wages continue to rise: at 14 in August versus 15 in July and 21 in June.

The Richmond Fed no longer reports seasonally adjusted prices paid or prices received figures, which is odd given its other indexes are seasonally adjusted. So: not seasonally adjusted prices paid came in 2.45 in August versus 3.00 in July, 3.58 in June and 2.73 in May. NSA prices received registered 1.87 in August versus 1.31 in July, 2.35 in June and 1.55 in May.

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.