The Philly Fed index is exactly the same in June at minus 4.0 from minus 4.0 in May, a little weaker than the minus 1.0 projected in the Econoday consensus forecast. The sub-zero reading shows business activity continues to contract, slowly, with notable softness in employment and workweek.

New orders sag but remain barely positive at 2.3 in June versus 7.5 in May. Shipments jump into positive territory at 8.3 versus minus 13.0 in May. Price pressures ease with prices paid at 41.4 versus 59.8 while prices received come in at 29.5 versus 43.6.

On the worrisome side, employment drops to minus 9.8 from 16.5 and workweek falls to minus 1.6 from 2.0. Delivery times accelerate to 13.6 from minus 9.2, showing manufacturers are doing better keeping up with orders. The six-month outlook index retreats to 18.3 from a euphoric 47.2 and 6-month capex eases to 14.5 from 27.0.

The index is expected to improve to minus 1.0 in June from minus 4.0 in May to show manufacturing activity was basically flat from May.

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.