Iowa Leading Indicators Index held steady for four consecutive months

posted on Wednesday, June 12, 2013 in Blog

The Iowa Leading Indicators Index held steady at 106.1 in April for a fourth consecutive month after remaining at 106.0 from October through December of 2012. The monthly diffusion index increased to 62.5 after holding steady at 56.3 for the two previous months reflecting widespread gains that were offset by large drops in just two components. The six-month annualized change in the index continued to be positive (0.2%) for the fifteenth consecutive month but dropped closer to zero while the six-month diffusion index fell to 56.3. The non-farm employment index increased for the 31st consecutive month, but the increase fell below 0.1 percent in April for the fourth time in the last 22 months. The ILII's recent stability suggests that Iowa employment growth may continue to slow, but levels should remain steady through summer.

The two most positive contributors in April were building permits and the new orders index. The most positive contributor in April was building permits, with the 12-month moving average rising to the highest level since March 2008. In April 2013, the 12-month moving average for building permits increased 1.9 percent to 840 from 824 in March but remained 27.3 percent below the historical average for April (1998-2008). The new orders index was a positive contributor for the first time in six months, exceeding the value of 69.0 from one year ago. The monthly index value jumped to 77.9 from the March value of 69.5 after slowly rising from the low of 53.5 in November 2012.

The two largest negative contributors were the agricultural futures profits index and the national yield spread. The agricultural futures profits index was a negative contributor for the fifteenth consecutive month. The 12-month moving averages of expected profits for livestock fell again this month, while expected profits for both crop components also decreased. The last time that expected profits fell for all of the components in the same month was May 2012. Expected profits for corn fell in April for the first time in nine months while expected profits for hogs dropped for a tenth consecutive month. Although near futures cattle prices were up 6.1 percent over last year, expected cattle profits have been falling for the last two years. The national yield spread decreased to 1.70 in April from 1.87 in March as the long-term rate fell 20 basis points and the short-term rate fell 3 basis points. Long-term rates dropped throughout April after a disappointing national employment report raised concerns the economy was slowing.

Unemployment insurance claims, the Iowa stock market index, and manufacturing hours were all positive contributors in April. Unemployment insurance claims decreased in April for the 41st time in 42 months. Claims were 7.8 percent below the number of claims made in April 2012, but were 3.5 percent above the historical monthly average for April (1987-2008). Of the 34 stocks included in the Iowa stock market index, 17 had positive gains in the month of April, including 7 of the 11 financial-sector companies. On average, Iowa stock prices rose 1.8 percent in April. The monthly value of manufacturing hours increased to 41.5 hours which was 0.6 hours above the March 2013 level and 0.2 hours above the level reported for April 2012. Recent jumps in hours brought the monthly value from over an hour below historical levels in February to 0.4 hours over historical April levels (1996-2008).

The only other negative contributor in April was diesel fuel consumption. The 12-month moving average decreased to 55.34 from 55.37 in March after four months of increases.

The Department of Revenue Iowa Leading Indicators Index April 2013 Report is available on the Web: Please contact Victoria Daniels at (515) 281-8450 or if you have any questions about the report.