The Iowa Leading Indicators Index increased to 103.4 in September from a revised 103.2 in August, the Iowa Department of Revenue reported this week. The index has decreased 2.9% from February 2020, the last month before the COVID-19 quarantines began in Iowa. The monthly diffusion index improved to 56.3 in September from 50 in August, the highest that the diffusion index has reached since September 2018.  

The Iowa nonfarm employment coincident index recorded a 0.49% decline in September, the 10th straight month of decline. The six-month diffusion index improved in September to 43.8; the leading indicator index's six-month annualized drop in value of 2.5% and the decline in the Iowa nonfarm employment coincident index suggest the Iowa economy will continue to weaken into winter, and that employment growth will weaken over the next three to six months. 

The Iowa Leading Indicators Index (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 50.0.

Five of the eight components added to the ILII’s monthly increase in September: the new orders index, residential building permits, diesel fuel consumption, the national yield spread and the Iowa stock market index. The September 2020 monthly value of the new orders index increased to 80.1 from 72.5 in August, and was higher than the September 2019 value of 45.9. The 12-month moving average of the new orders index increased to 53.4 from 50.6. 

  • September 2020 residential building permits were 29.6% above September 2019.
  • Taxable diesel gallons were 67.17 million gallons in September 2020, 1.3% higher than September 2019.
  • During September, the yield spread expanded to 0.57% from 0.55% in August.

The full Iowa Leading Indicators Index for September is available online.