The Kansas City Fed manufacturing index edges up to minus 3 in May from minus 4 in April, suggesting marginal contraction in business activity continues. The result may be uninspiring but it is reassuring that the disastrous narrative for manufacturing around the tariff shock has not come to pass.

New orders remains negative at minus 9 versus minus 11. Employment actually expands at 3 versus minus 11. Inflation pressures ease with prices received at 17 versus 29 and prices paid at 34 versus 42.

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.