The Iowa Leading Indicators Index (ILII), used by state officials to forecast tax revenues, increased to 110.2 in November from 109.7 in October.
With five of the eight components contributing positively, the monthly diffusion index decreased to 68.8 in November, from a revised 75 in October. November marks the 16th month in a row that the monthly diffusion index has registered at or above 50. The COVID-19 pandemic caused the ILII to drop as low as 103.4 in June 2020 before sharply recovering to the current high. November marks the 14th month in a row since the ILII has exited contraction.
With consistent positive improvements over the last year, this report suggests that employment growth will slow down yet still be positive over the next three to six months. The six-month diffusion index decreased to 50 in November from 62.5 in October and the annualized six-month ILII change value was 3.4%. The Iowa nonfarm employment coincident index recorded a 0.18% increase in November, the eighth month of increase since February 2020.
Other key findings include:
- Taxable diesel gallons were a record high 90.14 million gallons in November 2021, 19.3% higher than the 75.54 million gallons recorded for November 2020. The 12-month moving average of diesel fuel consumption increased to 67.33 million gallons in November from 66.11 million in October. With the monthly increase in November, there is still a growing demand for the transport of manufacturing inputs and final products as well as agricultural commodities.
- National yield spread went from a positive contributor in October to a detractor in November. During November, the yield spread contracted to 1.51% from 1.53% in October. The long-term rate decreased 2 basis points while the short-term rate remained unchanged. A contraction in the long-term rates could indicate waning confidence in long term economic growth.
- The largest detractor from the index in November 2021 was the new orders Index. November 2021 is the third month since June 2020 that the new orders index was a negative contributor to the Index. The monthly value of the new orders index decreased to 57.1 from 73.8 in October, and was substantially lower than the November 2020 value of 77.8. The 12-month moving average of the new orders index decreased to 72.7 from 74.4.
