The US economy slides again

The ISM (Institute for supply management) and the PMI (purchasing managers index) are two monthly surveys of executives at US corporations.  Both are available early in the month, and give a good guide to the state of the economy, weeks before official data such as industrial production, retail sales, and GDP become available. 

Because they are sample surveys, drawing on different samples, there will be random volatility due to sampling error.  I try and reduce this two ways.  First, I extreme-adjust each of the time series, separately.  This technique, pioneered I think by the Bureau of the Census, removes extreme "spikes" from the data.  Then I take an average of the two series.  In statistics, if you have two statistically independent data series, the average of the two will have a lower standard deviation/variance than either separately.  Often, when I inspect the underlying data, one series might be up in the month while the other is down, and this position reverses in the next month.   So the average of the two is smoother than either individually.  This average is shown in the green line in the chart below.

Conclusion:  the US economy continues to slow.