Kansas City Fed district manufacturing activity contracted again in September from August as the Kansas City Fed composite index of current business conditions declined to minus 8 in September from minus 3 in August and minus 13 in July.

The composite index of six-month expectations for business conditions improved slightly to 9 in September from 8 in August, 5 in July and 7 in June.

The current new orders index came in at minus 14 in September versus minus 12 in August, minus 21 in July and minus 13 in June. Production dropped to minus 17 in September from 6 in August, minus 12 in July and minus 11 in June. The number of employees index was at minus 11 versus minus 7 in August, minus 12 in July and minus 11 in June.

Prices paid registered 13 in September versus 18 in August, 17 in July, and 9 in June. Prices received dropped to minus 5 in September from 6 in August, 0 in July and 3 in June. That unusual negative number for prices paid suggests corporate pricing power is diminished.

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.