Philadelphia Fed Business Outlook Survey has become a front and center report for traders because of the serious structural problems in the manufacturing sector due to the rising U.S. dollar.

The consensus range for the Philadelphia Fed Business Outlook Survey was 9.0 to 18.9, the actual number, 5.7. This is the lowest level since March.

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Folks, the Federal Reserve’s transitory thesis is dangerously close to being a bust. The slow down in general business conditions during the first half of 2015 is not yet abating. I think we give this one more month to see if overall conditions improve before we call the Federal Reserve wrong on their transitory thesis.

Notice how the S&P 500 sold off at 10:00 AM when the Philadelphia Fed Business Outlook Survey was released today:

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Just how bad was the Philadelphia Fed Business Outlook Survey? New orders came in less than half of last month. New Orders were 7.1 versus 15.2 the prior month. Employment also contracted coming in at -0.4 versus 3.8 the prior month.

In this survey, firms were asked to assess the importance of seasonal factors in monthly production, seasonal changes in their production by month, and whether these seasonal factors have changed in importance over time. Firms reported seasonal increases in production in the spring and during the fall as well as a decrease in activity in mid-summer and during the winter months.

To review, traders follow this survey as an indicator of manufacturing sector trends. It is correlated with the ISM manufacturing index and the index of industrial production. 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.