Iowa Leading Indicators Index increases in April

The Iowa Leading Indicators Index (ILII), used by state officials to forecast tax revenues and the future direction of economic activity, increased 0.3% in April 2022 to 110.7 from 110.4% in March 2022. The monthly diffusion index remained unchanged at 50.0. The Iowa nonfarm employment coincident index recorded a 0.18% increase in March, the thirteenth month of growth in a row.

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. With consistent positive improvements over the last year and a half, this report suggests that employment growth will be positive over the next three to six months. The six-month diffusion index remained unchanged in April at 62.5 from March 2022 and the annualized six-month ILII change value was 1.7%.

Other notes

  • Average weekly unemployment claims was the strongest contributor to the ILII in April. Changes are calculated based on a 12-month moving average and are inverted when added to the ILII. The 12-month moving average of claims decreased from 2,472 to 2,180. Unemployment claims were 73.4% below April 2021 claims and 65.8% below average historical claims for April (1988-2021).
  • New orders index went from a positive contributor in March to a detractor in April. Diesel fuel consumption went from a detractor to the index in March to a positive contributor in April.
  • For the second month in a row, the largest detractor from the index in April 2022 was the residential building permits. In April, permits were 1,580, down from 1,903 last year. The 12-month moving average decreasing to 1,092 in April from 1,119 in March. April 2022 permits were 17.0% below April 2021, yet 29.3% above the monthly historical average from 1998 to 2021.

[More: Read the full April 2022 report]