The Philadelphia Fed’s November index of general business conditions in the manufacturing sector eased to 20.7 from 28.5. A decline to 23.2 had been the Consensus expectation.

During the last ten years there has been a 71% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 53% correlation with q/q growth in real GDP.

Most of the sub indexes declined with the notable exception of the index for the number of employees which rose to 17.4 and recovered most of the prior month's.

The business conditions index reflects a separate survey question, not the sub indexes.

The separate index of expected business conditions in six months reversed virtually all of the prior two months' declines with a 24.5 point jump to 52.1. That was still off the highs last year in the 60s.

The prices paid index fell to 53.9. Expectations for prices rose to the highest level since March. During the last ten years there has been a 76% correlation between the prices paid index and the three month growth in the PPI for intermediate goods. The correlation with the finished goods PPI has been 41% and with the CPI it's been 45%.

The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.

The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found here.

Today's comments by Fed Chairman Greenspan on the Euro can be found here.