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Iowa’s economic index shows slight uptick

Iowa’s economic index shows slight uptick

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DES MOINES — Iowans heard some good economic news Friday when state officials reported an index of leading indicators posted its first positive increase in July after seven straight months of decline.

It was a small increase — one-tenth of 1 percent — but it was the first month of positive change since the coronavirus “swiftly and sharply” affected both the Iowa and U.S. economies, analysts with the state Department of Revenue said.

The Iowa Leading Indicators Index increased to 103.3, with four of the index’s eight components rising.

Still, signs of a weakened economy persist.

The Iowa index was constructed to signal economic turning points with two key metrics that, when seen together, are considered a signal of a coming economic contraction: a six-month annualized change in the index below minus 2 percent; and a six-month diffusion index below 50.

The six-month annualized change in the index improved to negative 6.3 percent in July from a revised negative 7.1 percent in June. It is the 21st consecutive month of a negative value and the fifth month below a minus 2.0 percent change, officials said.

The Iowa non-farm employment coincident index recorded a 0.51 percent decline in July, the eighth month in a row of decline and the fourth largest one-month drop in the 20-year history, behind only April, May and June of this year, according to the monthly department report.

The decline “strongly suggests” the Iowa economy will continue to weaken throughout the first quarter of fiscal 2021, and employment growth will weaken over the next three to six months, state officials said.

The four positive index components in July were residential building permits, the new orders index, diesel fuel consumption and average manufacturing hours.

Components that dropped in the index were average weekly unemployment claims (inverted), the national yield spread, the agricultural futures profits index and the Iowa stock market index.


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