|
The statutory mission of the Iowa Department of Revenue is to serve
Iowans and support state government by collecting all taxes required by
law, but no more.
The
Iowa Leading Indicators Index (ILII) increased 0.1 percentage points to 108.3
in November 2017 from 108.2 (100=1999) in October. The monthly diffusion index decreased
to 68.8 in November from 93.8 in October with five of the eight components
contributing positively.
The annualized six-month change decreased
to 2.7 percent in November from a revised 2.9 percent in October; the downward
revision resulted from lower October average manufacturing hours. The six-month
diffusion index remained unchanged at 75.0 in November. Six of the eight
indicators (agricultural futures profits index (AFPI), average manufacturing
hours, average weekly unemployment claims (inverted), diesel fuel consumption,
the Iowa stock market index, and new orders index) experienced an increase of
greater than 0.05 percent over the last half-year.
With an increase of 0.11 percent in November,
gains in Iowa’s non-farm employment index, based on the establishment survey
conducted by the Bureau of Labor Statistics (BLS), continued into a seventh consecutive
year. This was the largest monthly gain in the employment index since June,
which recorded an increase of 0.12 percent. The positive ILII signals suggest
that employment growth will continue into spring.
Five of the eight components were
positive contributors to the ILII in November. These include, in the order from
largest contributor to smallest, diesel fuel consumption, the new orders index,
average weekly unemployment claims (inverted), AFPI, and the Iowa stock market
index. Taxable diesel gallons were 66.45 million gallons in November 2017, 4.9
percent higher than the 63.36 million gallons reported in November 2016. In November,
the 12-month moving average of diesel fuel consumption increased to 59.70
million gallons from 59.44 million in October. Diesel fuel consumption, a
measure of semi-truck traffic within and across Iowa, has been a positive
contributor in nine of the past twelve months.
The November monthly value of the new
orders index remained unchanged from October’s monthly value of 58.4, yet
logged a value well above the 46.1 reported in November 2016. With the year-over-year
gain, the 12-month moving average of the new orders index increased to 60.4
from 59.4. For the twelfth month in a row the monthly value of the new orders
index registered above 50.0, the threshold that signals expansion in
manufacturing.
The 12-month moving average of weekly
unemployment insurance claims decreased to 2,612 in November from 2,638 in October,
where changes are inverted when considered in the ILII. Average monthly claims
were down 8.5 percent from last November and 13.6 percent below the monthly
historical average (1987-2016). November 2017 is the thirteenth straight month
with the 12-month moving average of Iowa weekly unemployment insurance claims
below 3,000, a threshold not crossed during the previous 11 years. The BLS
reported that the Iowa unemployment rate (a coincident indicator) decreased
from 3.0 percent in October to 2.9 percent in November. The last time the rate was this low was in December 2000. The state’s jobless rate was 3.5 percent one
year ago. The U.S. unemployment rate remained at 4.1 percent in November. One
driver of the low unemployment numbers is the continued drop in Iowa’s labor
force participation rate, down from 69.1 percent in November 2016 to 68.4
percent in November 2017.
The AFPI was a positive contributor to
the ILII for the sixteenth time in the past 2 years with an expected profit
increase experienced by the two livestock commodities included in the index.
November crush margins for hogs were up 3.4 percent from October while crush margins
for cattle were up 26.7 percent, the largest gain since May 2016. Compared to
last year, new crop corn and soybean prices were both lower by less than one percent.
The Iowa stock market index experienced
gains in 18 of the 35 stocks, with six of the 12 financial-sector company
stocks seeing gains. Value increases experienced by Deere & Company, Tyson
Foods, Principal Financial, and ConAgra, offsetting losses experienced by Wells
Fargo and Dow-DuPont, pushed the index up slightly to 114.75 in November from 114.45
in October.
The national yield spread, residential
building permits, and average manufacturing hours were the three components
that contributed negatively to the index in November. The yield spread contracted
to 1.10 percent as the long-term rate decreased 1 basis point while the
short-term rate increased 16 basis points. The slight decrease in the long-term
interest rate to 2.35 percent suggests cautious expectations for the long-run
economic strength of the national economy. The increase in the short-term
interest rate to 1.25 percent reflects the expectations of the Federal Reserve
increase in the federal funds interest rate to a range between 1.25 and 1.5
percent in December.
The 12-month moving average of
residential building permits decreased to 1,089 in November from 1,106 in October.
November 2017 residential building permits were 14.0 percent below November
2016, yet 27.4 percent above the historical average for November (1998-2016). Decreases
were primarily experienced in permits for units of five or more within a
structure. Permits for units of five or more within a structure decreased 193
percent from 710 permits in November 2016 to 242 permits in November 2017.
The 12-month moving average of
manufacturing hours decreased to 41.89 in November from 41.91 in October, down
from 41.93. November 2017 average hours were 42.4, below the 42.6 hours in November
2016, yet over a half hour above the historical monthly average (1996-2016).
The monthly Iowa Leading Indicators Index report
is available on the Department's website. Please contact Amy Harris at (515) 281-0196 or Amy.Harris@iowa.gov if you have any questions about the
report.
|
