The Iowa Leading Indicators Index increased to 108.9 in June 2021 from 108.5 in May. June is the 11th month in the last 12 months that the index has increased. At this time last year the index had fallen to its lowest point at 103.2 before a sharp rebound to the current high.

The Iowa nonfarm employment coincident index recorded a 0.36% increase in June 2021, the third month of increase since February 2020. The six-month diffusion index remained the same at 87.5 in June from May.

Four of the eight components of the Iowa Leading Indicators Index increased in June: diesel fuel consumption, average weekly unemployment claims (inverted), the agricultural futures profits index, and the new orders index. The components that contributed negatively to the index were average manufacturing hours, the Iowa Stock Market Index, the national yield spread and residential building permits.

Over the last six months, seven of the eight component indicators saw an increase of greater than 0.05%: agricultural futures profits index, average weekly unemployment claims (inverted), diesel fuel consumption, the Iowa Stock Market Index, the national yield spread, the new orders index, and residential building permits.

The 12-month moving average of weekly unemployment insurance claims decreased to 5,413 in June from 5,970 in May. Average monthly claims have declined 76.4% compared with June 2020, and are 35.6% below the monthly historical average.

The report suggests employment growth will improve over the next three to six months, given the consistent improvements over the last nine months, although the pace might be slowing after the index’s peak in March.

The monthly value of the new orders index increased to 74.1 from 72.7 in May, an improvement on the June 2020 value of 50.2. The 12-month moving average of the new orders index increased to 75.5 from 73.5.

The agricultural futures profits index increased and showed both grain and livestock expected profit gains. In 2020 crop corn prices were 67.7% higher and soybean prices were 56.6% higher than this year. The June crush margin for hogs increased 0.4% from May, while the crush margin for cattle increased 2.5%. The crush margin involves the market value of the animal minus its initial cost and the cost of feeding it.

The yield spread decreased to 1.48% from 1.6% in May. The long-term rate decreased 10 basis points while the short-term rate increased two basis points. June is the second month in a row the yield spread contracted and the sixth month in a row since June 2018 that the yield spread was at or above 1%.

June 2021 saw 13 of the 31 companies in the Iowa Stock Market Index increase, including four of the 11 financial sector companies. The index decreased to 126.65 in June from 130.76 in May due to losses from about two-thirds of the companies.

Diesel fuel consumption increased 12.2% from June 2020; the 12-month moving average increased to 65.27 millions gallons in June from 64.68 million in May. The average weekly manufacturing hours were 39.7 down from 40.9 in June 2020 and nearly two hours below the historical monthly average from 1996 to 2020.

The full report is available online.