Manufacturing business activity in the Federal Reserve Bank of Richmond's district continued to contract with the Richmond Fed's composite manufacturing index at minus 9 in May versus minus 13 in April and minus 4 in March.

New orders, the forward-looking indicator, came in at minus 14 in May versus minus 15 in April, and minus 4 in March. Shipments were at minus 10 in May versus minus 17 in April, minus 7 in March.

Employment came in at minus 2 in May versus minus 5 in April and minus 1 in March. Wages came in at 23 in May, 24 in April, 19 in March.

Price pressures were pretty stable. Not seasonally adjusted prices paid came in at 5.35 in May versus 5.37 in April, 3.75 in March. NSA prices received registered 2.73 in May versus 2.65 in April, 2.34 in March.

The regional Fed manufacturing reports, including Dallas Fed on Tuesday, seem of a piece: they suggest ongoing decline in business activity, but the rate of contraction has slackened after April's tariff shocks.

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.