The Dallas Fed's manufacturing survey shows activity remains sluggish in October. The Dallas Fed's general activity index comes in at minus 5.0 compared with minus 8.7 in September. As a 0 figure indicators flat business conditions, these numbers indicate continued slow contraction.

Current production is unchanged at 5.2 in October and September, suggesting modest expansion.
New orders, the leading indicator, comes in at minus 1.7 in October versus minus 2.6 in September. That shows slow contraction in new orders.

Employment is at 2.0 in October versus minus 3. 4 in September. Capex comes 4.8 in October versus 13.3 in September.

Prices paid for raw materials registers 33.4 in October versus 43.4 in September. Prices received index is at 7.7 versus 11.7 in September. On the six-month outlook, general business conditions are at 7.0 in October versus 8.4 in September.

The Dallas Fed Manufacturing Survey tracks factory activity in Texas on a monthly basis. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month. Responses are aggregated into balance indexes where positive values generally indicate growth while negative values generally indicate contraction. About 100 manufacturers regularly participate in the survey.

Investors track economic data like the Dallas Fed Manufacturing Survey 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 Dallas Survey gives a detailed look at Texas' manufacturing sector, how busy it is and where it is headed. Since manufacturing is a major sector of the economy, this report can have a big influence on the markets. Some of the survey indexes also provide insight on inflation pressures -- including prices paid, prices received, wages & benefits, and capacity utilization. The Federal Reserve closely watches this report because when inflation signals are flashing, policymakers can reset the direction of interest rates. As a consequence, the bond market can be highly sensitive to this report. 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.