Iowa Leading Indicators Index increases again

The Iowa Leading Indicators Index (ILII), used by state officials to forecast tax revenues, increased 0.1% to 103.4 in September from a revised 103.2 in August. September is the second month that the index has increased since the COVID-19 crisis in Iowa began.

The ILII has decreased 2.9% from February, the last month before the COVID-19 quarantines began in Iowa. With five of the eight components contributing positively, the monthly diffusion index improved to 56.3 in September from 50.0 in August, the highest that the diffusion index has reached since September 2018.

The Iowa non-farm employment coincident index recorded a 0.49% decline in September, the 10 month in a row of decline and the sixth largest one-month decline in the 20-year history behind only the months of April 2020 through August 2020. The six-month diffusion index improved in September to 43.8, the annualized six-month ILII change value of -2.5% and the decline in the Iowa non-farm employment coincident index strongly suggest the Iowa economy will continue to weaken into the winter. This report suggests that employment growth will weaken over the next three to six months.

Five of the eight components added to the ILII’s monthly increase in September: the new orders index, residential building permits, diesel fuel consumption, the national yield spread, and the Iowa stock market index. The September monthly value of the new orders index increased to 80.1 from 72.5 in August, and was higher than the September 2019 value of 45.9. With the year-over-year increase, the 12-month moving average of the new orders index increased to 53.4 from 50.6.

The monthly Iowa Leading Indicators Index report is available on the department’s website.