The Iowa Leading Indicators Index September 2021 Report looks at economic activity in September of 2021. The index increased 0.1% in September 2021 after increasing 0.3% in August. However, due to rounding, the index remained at 109.3 (100=1999) despite the slight increase from August. With four of the eight components contributing positively, the monthly diffusion index decreased to 50.0 in September, from a revised 62.5 August. September marks the fourteenth month in a row that the monthly diffusion index has registered at or above 50.0.
The COVID pandemic caused the ILII to drop as low as 103.4 in June 2020 before sharply recovering to the current high. September marks the twelfth month in a row since the ILII has exited contraction.
According to the state chief economist, with consistent positive improvements over the last year, the report suggests that employment growth will improve over the next 3 to 6 months. The six-month diffusion index decreased to 75.0 in September from 81.3 in August and the annualized six-month ILII change value was 5.6. The Iowa nonfarm employment coincident index1 recorded a 0.20% increase in September, the sixth month of increase since February 2020. These are all good indications of a robust economic turnaround.
- Initial unemployment insurance claims was the strongest contributor to the ILII in September. The 12-month moving average of weekly unemployment insurance claims decreased to 4,280 in September from 4,554 in August. Average monthly claims have declined 66.8% from last August and are 33.9% below the monthly historical average (1988-2020). Weekly unemployment insurance claims have improved dramatically from their unprecedented highs of March and April 2020.
- Average weekly manufacturing hours and the Iowa stock market index both went from positive contributors in August to detractors in September, while yield spread went from a detractor to a positive contributor in September. Average manufacturing hours were a negative contributor for the eighth time in the last 12 months, and the Iowa stock market index decreased from 133.06 to 128.72. For the ninth time in the last twelve months, diesel fuel consumption was a positive contributor to the Index, showing a growing demand for the transport of manufacturing inputs and final products.
- The largest detractor from the index in September 2021 was the new orders index. September 2021 is the first 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 64.6 from 77.2 in August yet was substantially lower than the September 2020 value of 80.1. The 12-month moving average of the new orders index decreased to 75.1 from 76.4.
