Two leading principal components (PCs) of sea surface temperature (SST) over the entire Pacific basin are derived using pairwise-rotated EOF method. One PC (designated by P) is nearly identical to the PDO, the leading PC of Pacific SST poleward of 20 degree north, and another (designated by T' is highly correlated with conventional ENSO indices, but with more equatorially focused spatial regression pattern. Based on these orthogonal PDO and ENSO indices, the relationship between PDO and ENSO is re-investigated using observational datasets. It is shown that nearly 60% variance of the winter-month PDO variability can be explained as a reddened response to stochastic extratropical atmospheric forcing due to the thermal inertial of ocean mixed layer, and by the reemergence of SST anomalies in successive winters. The tropical ENSO forcing contribution by the way of the atmospheric bridge adds no more than another 10% of the variance, suggesting that PDO can be regarded as a Northern Hemisphere extratropical phenomenon that exists independently of the interannual variability of tropical ENSO phenomenon. This finding based on observational dataset agrees with previous numerical model results.