By CBJ News Staff
The Iowa Leading Indicators Index (ILII), used by state officials to forecast tax revenues, increased 0.1% to 103.3 in July 2020 from a revised 103.1 in June. This is the first month of positive change after seven months in a row of declines.
With four of the eight components contributing positively, the monthly diffusion index improved to 43.8 in July from 18.8 in June, the highest the diffusion index has reached since January 2020. COVID-19 has swiftly and sharply affected the Iowa economy along with the U.S. as a whole. July is the first month over month positive change since the COVID-19 crisis impacted Iowa.
The Iowa non-farm employment coincident index recorded a 0.51% decline in July, the eighth month in a row of decline and the fourth largest one month decline in the 20-year history behind only April, May and June 2020. The six-month diffusion index remaining unchanged at 25.0 in July, the annualized six-month ILII change value of -6.3% and the decline in the Iowa non-farm employment coincident index strongly suggest the Iowa economy will continue to weaken throughout first quarter FY 2021. This report suggests that employment growth will weaken over the next three to six months.
Four of the eight components contributed positively to the ILII in July, residential building permits, the new orders index, diesel fuel consumption and average manufacturing hours. These positive contributors suggest that continuing low mortgage rates are benefiting residential building expansion in the state. The manufacturing industry has improved as demonstrated by the improvements in purchasers’ surveys results and increases in manufacturing hours reported.
The monthly Iowa Leading Indicators Index report is available on the department’s website. CBJ