Manufacturing business activity in the Federal Reserve Bank of Richmond's district remains soft despite a recovery of the Richmond Fed's composite manufacturing index to minus 7 in August from minus 20 in July.

The index has been in negative territory for six consecutive months. If not for a slightly positive reading in February, the index has been consistently negative since the end of 2023. And even then, it had already been mostly negative since mid-2022.

Looking ahead, the new orders index improved to minus 6 from minus 25 in July, but still pointing to weak conditions. Shipment and employment indexes followed the same pattern, although the improvement for employment was more modest: to minus 5 from minus 18 for shipments and to minus 11 from minus 16 for employment.

On the price front, pressures increased with unadjusted prices paid at 7.24, up from 5.65 in July. The average growth rate for prices received was roughly unchanged, with the index coming in at 3.14 in August after 3.16 in July.

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.