The Iowa Leading Indicators Index (ILII) remained unchanged at 105.2 in February for the third month in a row.

A six-month annualized change in the index below -2.0% and a six-month diffusion index below 50.0 are considered a signal of a coming contraction when seen together.

The six-month annualized change showed contraction for the 13th month in a row, as the ILII decreased 1% during the six-month span through February, an annualized rate of -2.1%. The six-month diffusion index remained in a contractionary signal for the 14th month in a row.

The monthly diffusion index increased to 62.5 in February from a revised 56.3 in January. A diffusion index measures the proportion of components rising in a given time period. Components are assigned values based on how they increased or decreased over the time period and the assigned values for all the components are then added together.

The Iowa nonfarm employment coincident index recorded a 0.09% increase in February. This index is computed using a complex computation based on the Conference Board’s Leading Indicators Index.

Five of the eight components increased month over month in February: Average manufacturing hours, the national yield spread, the agricultural futures profit index, the Iowa Stock Market Index, and residential building permits. Diesel fuel consumption, the new orders index, and average weekly unemployment claims detracted from the ILII.

The 12-month moving average of average weekly manufacturing hours increased to 39.66 in February from a revised 39.53 in January. In February, average hours were 40.5, around a quarter hour below the historical monthly average.

The yield spread remained in inversion territory (below 0) in during February at -1.23%, up from -1.39% in January. February is the 16th month in a row that the yield spread has been in inversion. The long-term rate increased 15 basis points while the short-term rate decreased by 1.0 basis point.

The agricultural futures profit index contributed to the ILII’s value for February despite expected profit decreases in both crop commodities and cattle commodities. Hogs were the only component with expected profit increases. Compared with last year, new crop corn prices were 21.3% lower while soybean prices were 16.1% lower. The February crush margin for cattle decreased 8.2% from January while the crush margin for hogs increased 21.6%.

In February, 12 of the 28 Iowa-based or Iowa-concentrated publicly traded companies on the Iowa Stock Market Index gained value, and three of the 10 financial-sector companies increased. Despite nearly two-thirds of the stocks experiencing losses, the stock market index increased to 123.7 in February from 121.8 in January.

Residential building permits were 708 in February, up from 638 last year. The 12-month moving average increased to 922 in February from 916 in January. February 2024 permits were 11.0% above February 2023, and 28.5% above the monthly historical average.

The 12-month moving average of average weekly unemployment claims rose in February to 2,339 from 2,350. Unemployment claims were 8.2% above February 2023 claims, yet 37.0% below average historical claims for February.

The new orders index in February remained at 49.6, the same as January. The 12-month moving average of the new orders index decreased to 49.7 from 50.2 in January.

Diesel fuel consumption decreased 12.4% between February 2023 and February 2024. The 12-month moving average decreased to 64.14 million gallons in February from 64.83 million in January.

The full report is available online.