The Philly Fed index recovered but remained in contraction at minus 1.7 in November after a sharper decline in current business activity at minus 12.8 in October, pretty close to the 0.0 reading anticipated in the Econoday consensus.

Unfortunately, new orders, the forward-looking sub-index, dropped into contraction to minus 8.6 from positive 18.2 in October, not a good sign for the outlook. Employment continued its moderate expansion at 6.0 versus 4.6. Prices paid are even more problematic at 56.1 versus 49.2, indicating huge input price pressures.

The six-month outlook index zoomed to 49.6 in November from an already buoyant 36.2 in October.

The consensus sees the manufacturing index showing no change at 0.0 in October versus minus 12.8 in September.

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.