The Philly Fed manufacturing index comes in at 12.5, very close to the expected 11.5 figure for March and down only a bit from 18.1 in February. This was its second straight decline but still shows ongoing moderate expansion in business activity.

The report is a reassuring sign of resilience after the nasty drop to minus 20 in the New York Fed's Empire manufacturing index for March from 5.7 in February.

For Philly Fed, new orders and shipment growth slows but remains in positive territory, and employment, notably, shows faster gains. Input price pressures increase while prices received continue to rise but at a marginally slower pace.

New orders ease to 8.7 in March from 21.9 in February. Shipments are at 2.0 versus 26.3. Employment jumps to 19.7, its highest since October 2022, from 5.3 in February.

On the prices front, prices paid surge to 48.3, its fourth sequential monthly rise and highest since July 2022, up from 40.5 in February. Prices received come in at 29.8 versus 32.9.

On the six-month outlook, the business conditions index is at 5.6 versus 27.8 in February. Six-month capex is hanging in at 13.4 versus 14.0 in February, also reassuring given widespread concern that tariff uncertainty is chilling business investment.

The consensus looks for continued moderate expansion with the index at 11.5, down from 18.0 in February. As an early read on March, lots of attention on this one.

Separately, the New York Fed's Empire manufacturing index on Monday surprised to the downside at minus 20.0 in March, down from 5.7 in February, and well below the 0.2 reading anticipated for March in the Econoday consensus.

The general conditions index from this business outlook survey is a diffusion index of manufacturing conditions within the Philadelphia Federal Reserve district. This survey, widely followed as an indicator of manufacturing sector trends, is correlated with the ISM manufacturing index and the index of industrial production.

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 Philly Fed survey, 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. The Philly Fed survey gives 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. Some of the Philly Fed sub-indexes also provide insight on commodity prices and other clues on inflation. The bond market is highly sensitive to this report because it is released early in the month and is available before other important indicators.