The Iowa Leading Indicators Index (ILII) rose to 106.9 in April, up from 106.8 in March, marking a 0.1 percent increase, according to data released by the state. The monthly diffusion index, which measures the number of components showing improvement, also increased from 50.0 in March to 56.3 in April.
Despite the uptick in the ILII, the Iowa nonfarm employment coincident index, which tracks current job trends, declined by 0.02 percent in April. The index has recorded declines in seven of the past eight months. However, long-term trends in the ILII suggest nonfarm employment is expected to increase over the next three to six months.
The ILII is designed to help identify economic turning points. A potential contraction is typically signaled when two conditions are met: a six-month annualized change below -2.0 percent and a six-month diffusion index below 50.0. In the latest six-month period, five of the eight component indicators rose more than 0.05 percent: average manufacturing hours, diesel fuel consumption, the Iowa Stock Market Index, the national yield spread, and residential building permits. Three components—agricultural futures profits index (AFPI), initial unemployment insurance claims, and the new orders index—declined more than 0.05 percent during the same period.
Diesel fuel consumption was the strongest positive contributor in April, increasing 8.4 percent year-over-year. The 12-month moving average rose to 65.54 million gallons in April, up from 65.09 million in March.
Initial unemployment insurance claims and the national yield spread also shifted from detractors in March to contributors in April. Meanwhile, the new orders index and the AFPI moved in the opposite direction, becoming detractors after contributing positively in the previous month.
The Iowa Stock Market Index was the strongest negative contributor in April. The index, which includes 27 Iowa-based or Iowa-concentrated publicly traded companies, declined to 146.36 in April from 155.22 in March. Only two of the 27 companies gained value during the month, and none of the nine financial-sector companies recorded gains.
