Iowa economic indicators point to contraction

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Two elements of the Iowa Department of Revenue’s index on the state economy reached lows not seen since 2009 in December as part of an overall decline that portends a softening of the economy.


The 12-month moving average for new orders, which measures manufacturing demand, dropped to 49.1, the lowest reading since December 2009, and diesel fuel consumption made a negative contribution for just the second time since the IDR leading indicators index was launched in 2006. The only other time diesel fuel consumption was a negative contributor in the month of December was in 2009. The department said the weakness in trucking is likely reflective of reduced demand for manufacturing inputs and outputs and holiday shipping orders for retail.


Overall, the index dropped 0.5 percent in December to 105.6, marking its 12 consecutive month of declines. The monthly diffusion index decreased in December to 25 from 56.3 in November, with two of the eight components experiencing positive changes.


The numbers signal a coming contraction, the IDR said.

“Although the weakness is stemming largely from Iowa’s agricultural sector and spillovers into manufacturing, the persistent widespread weakness across the index components in December continues to suggest future softness in Iowa’s economy,” according to the release.


There were two positive contributors to the leading indicators index in December: average manufacturing hours and new residential building permits.


New residential building permits rose to 841, a 17 percent increase from December 2014 but down 6.25 percent from the historical average for December. Permits for buildings with five or more units increased to 254 from 139 in December 2014. Single-family permits decreased 3 percent from a year ago. 
 
Read the full release.