|
The Iowa Leading Indicators Index (ILII) increased to 107.1 in November 2019 (100=1999) from 107.0 in October. This is the highest the index has registered since May 2019. With only three of the eight components contributing positively, the monthly diffusion index decreased to 37.5 in November from 43.8 in October.
The annualized six-month change improved to -0.2 percent in November from -0.7 percent in October. The six-month diffusion index improved to 50.0 in November which is the highest the six-month diffusion index has reached since October 2018. Four of the eight indicators (diesel fuel consumption, Iowa stock market index, national yield spread, and residential building permits) experienced an increase of greater than 0.05 percent over the last half-year. The increase in the six-month diffusion index is due to the national yield spread experiencing an increase of greater than 0.05 percent over the last half-year for the first time since February 2018.
With a 0.03 percent increase in November, Iowa’s non-farm employment index has experienced twenty-five consecutive months of positive growth. However, the negative annualized six-month ILII value and the six-month diffusion index of 50.0 suggest the broad-based signals of weakness in the Iowa economy continue. The goal of the ILII is to signal turning points in the Iowa economy as measured by employment. This report suggests that over the next 3 to 6 months, employment growth will weaken.
Only three of the eight components were positive contributors to the ILII in November. These include, in order from largest contributor to smallest, the Iowa stock market index, the national yield spread, and diesel fuel consumption. In November, the Iowa stock market index experienced gains in 22 of the 31 stocks, with nine of the eleven financial-sector company stocks experiencing gains. With slightly over two-thirds of the stocks, including Wells Fargo Financial, Deere and Company, Tyson Foods, CenturyLink, Principal Financial Group, and ConAgra experiencing gains, the index increased to 116.36 in November from 109.90 in October.
The national yield spread expanded to 0.24 in November from 0.03 in October, as the long-term rate increased 10 basis points and the short-term rate decreased 11 basis points. The increase in the long-term interest rate was the third month in a row of positive growth after nearly a year of decreases, suggesting a potential turnaround in weakened expectations for long-term national economic growth.
Taxable diesel gallons were 72.04 million gallons in November 2019, 2.7 percent higher than the 70.12 million gallons recorded for November 2018. The 12-month moving average of diesel fuel consumption increased to 62.82 million gallons in November from 62.66 million in October. Diesel fuel consumption, a measure of semi-truck traffic within and across Iowa, was a positive contributor for the eighth time in the last twelve months indicating growing demand for the transport of manufacturing inputs and final products and agricultural commodities.
Average weekly unemployment claims (inverted), average manufacturing hours, residential building permits, the agricultural futures profits index, and the new orders index were the components that contributed negatively to the index. The 12-month moving average of weekly unemployment insurance claims increased to 2,775 in November from 2,734 in October, where changes are inverted when considered in the ILII. Average monthly claims were up 12.8 percent from last November and 9.2 percent above the monthly historical average (1987-2018). For the last two years, the 12-month moving average of Iowa weekly unemployment insurance claims has been below 3,000, a threshold not crossed during the previous 11 years. The BLS reported that the Iowa unemployment rate (a coincident indicator) remained at 2.6 percent in November from October. The state’s jobless rate was lower at 2.4 percent one year ago. The U.S. unemployment rate decreased to 3.5 percent in November from 3.6 percent in October. The Iowa labor force participation rate registered at 70.8 percent, 3.2 percent higher than one year ago and the highest monthly participation rate since January 2011.
The 12-month moving average of manufacturing hours decreased to 41.39 in November from a revised 41.45 in October. November 2019 average hours were 40.7, nearly three-quarters of an hour below the 41.4 hours in November 2018, as-well-as over an hour below the historical monthly average (1996-2018). November 2019 residential building permits were 11.2 percent below November 2018 (674 vs 759) and 31.2 percent below the historical average for November (1998-2018). The 12-month moving average of residential building permits decreased to 926 in November from 933 in October. November marks the twelfth month in a row that the 12-month moving average has registered below 1,000 permits. Decreases in permits were concentrated in structures with five or more units, down from 188 in November 2018 to 70 in November 2019 (-62.8%).
The AFPI experienced expected profit losses in three of the four commodities. Compared to last year, new crop corn prices were 2.1 percent higher, and soybean prices were 2.9 percent higher. However, both crop commodities had higher breakeven costs than prices, pushing down expected profits. The November crush margin for hogs was down 3.0 percent from October while the crush margin for cattle was up 11.7 percent.
The November 2019 monthly value of the new orders index decreased to 46.8 from 59.3 in October and was lower than the November 2018 value of 50.0. With the year-over-year decrease, the 12-month moving average of the new orders index decreased to 53.6 from 53.9. Prior to October, the 12-month moving average of the new orders index had not experienced a positive gain since September 2018. November’s 12-month moving average of the new order index returned to negative change.
The monthly Iowa Leading Indicators Index report is available on the Department's website.
The 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.
|
