The Iowa Leading Indicators Index (ILII) decreased to 105.5 in April from 105.6 in March, according to a recent report from the Iowa Department of Revenue.
The report is based on a baseline figure of 100 established in 1999.
Additionally, the monthly diffusion index decreased to 37.5 in April from a revised 43.8 in March.
The Iowa nonfarm employment coincident index recorded a .12% increase in April, and the report predicted long term trends in the ILII suggest that nonfarm employment will increase over the next three-to-six months with no contractionary signal.
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.
The six-month diffusion index remained in a contractionary signal for the 16th month in a row, while the six-month annualized change was above a contractionary signal for the second month in a row.
The report also indicated five of the eight component indicators decreased more than 0.05% over the last six months: the agricultural futures profits index (AFPI), diesel fuel consumption, the national yield spread, new orders index, residential building permits, and initial unemployment insurance claims.
Average manufacturing hours, the Iowa Stock Market index, and the national yield spread were the only components to increase by more than 0.05% over the last six months.
The national yield spread was the strongest positive contributor to the ILII in April 2024, highlighting the difference between the yield on 10-year Treasury bonds and three-month Treasury bills. During April, the yield spread remained in inversion territory (below zero) at -0.90%, up from -1.26% in March, marking it the 18th month in a row that the yield spread has been in inversion. The long-term rate increased 33 basis points while the short-term rate decreased by three basis points.
Diesel fuel consumption went from a contributor in March 2024 to a detractor to the Index in April 2024. The national yield spread went from a detractor in March 2024 to a contributor in April 2024.
Diesel fuel consumption was the strongest negative contributor to the ILII in April 2024, and changes are calculated based on a 12-month moving average. Diesel fuel consumption increased 37.7% between March 2023 and March 2024. The 12-month moving average increased to 65.57 million gallons in March from 64.14 million in February.
