Kansas City Fed district manufacturing activity continues its slow decline in March but at a slower rate of contraction after months of sequential declines to lower overall levels of activity.

The Kansas City Fed composite index of current business conditions is at minus 2 versus minus 5 in February, minus 5 in January and minus 5 in December. Any index below 0 indicates contraction and an index above 0 shows expansion.

New orders, the leading indicator, are weaker while price pressures accelerate further in March. The new orders index is at minus 12 in March versus minus 7 in February, minus 6 in January and minus 16 in December. Production is at 1 in March, up from minus 13 in February, minus 6 in January and minus 5 in December.

The number of employees index registers minus 4 versus minus 14 in February, 1 in January, 0 in December.

Prices paid comes in at 42 versus 38 in February, 18 in January. Prices received are at 15 in March, 17 in February, 14 in January, 8 in December.

The composite index of six-month expectations for business conditions registers 10 in March versus 14 in February, 15 in January and 17 in December. That suggests a moderately positive outlook despite weakening current conditions.

Several survey respondents mentioned tariffs as a concern. The uncertainty of the tariffs is having a direct impact on our business as well as the overall economy," said one respondent sourcing raw material from Canada."We will be raising prices significantly for our imported products and seeking more domestic suppliers for our base raw material that we manufacture our products from." Others said tariffs have not yet affected business but they expect it will.

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.