Iowa Leading Indicators Index again decreased in April

The Iowa Leading Indicators Index (ILII) decreased to 107.0 in April, a decline of .5% from a revised 107.5 in March.

The monthly diffusion index increased to 25.0 in April from 6.3 in March.

The Iowa nonfarm employment coincident index recorded a 0.12% increase in April, the twenty-fifth month of growth. Long term trends in the ILII suggests that nonfarm employment will decrease over the next three to six months.

The ILII was constructed to signal economic turning points with two key metrics that when seen together are considered a signal of a coming contraction: a six-month annualized change in the index below -2.0% and a six-month diffusion index below 50.0.

The six-month diffusion index remained in contractionary signals for the fourth month in a row whereas the six-month annualized change remained below the contractionary threshold for the sixth month in a row. Seven of the eight component indicators decreased more than 0.05% over the last half-year: Agricultural futures profits index (AFPI), diesel fuel consumption, the Iowa stock market index, national yield spread, new orders index, residential building permits, and initial unemployment insurance claims. The decrease in the six-month diffusion index was due to the initial unemployment insurance claims decreasing more than 0.05%.

The report also indicated:

  • Diesel fuel consumption and average weekly manufacturing hours were the only positive contributors to the ILII in March. Diesel fuel consumption increased 5.8% between April 2022 and April 2023. The 12-month moving average increased to 66.88 million gallons in April from 66.54 million in March.
  • Diesel fuel consumption and average weekly manufacturing hours went from negative contributors to positive contributors to the Index.
  • The largest detractor from the index in April was the AFPI. During April, expected profits  decreases in both crop commodities and livestock commodities. Compared to last year, new crop corn prices were 23.8% lower while soybean prices were 13.0% lower. The April crush margin for cattle decreased 14.2% from March while the crush margin for hogs decreased 7.6%.
  • Another notable occurrence to components in the Iowa Leading Indicators was residential building permits experiencing a twelve-month moving average decrease to below 1,000 for the first time since November 2020.