The Iowa Leading Indicators Index (ILII) decreased 0.3% to 106.0 in September from a revised 106.3 in August.

During the six-month span through September, the ILII decreased 1.4%, an annualized rate of -2.8%. The six-month diffusion index increased to 18.8 in September from 6.3 in August.

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 diffusion index remained in contractionary signals for the ninth month in a row, and the six-month annualized change showed contraction for the eleventh month in a row.

The monthly diffusion index increased to 37.5 in September from 31.3 in August. 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 0.07% increase in September.

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

During September, the yield spread increased yet remained in inversion territory (below 0) at -1.18% from -1.39% in August. September is the eleventh month in a row that the yield spread has been in inversion. The long-term rate increased 21 basis points while the short-term rate remained unchanged from an increase of seven basis points in August.

The 12-month moving average of average manufacturing hours increased to 39.41 in September from a revised 39.36 in August. In September, average hours were 40.5, above the 39.9 hours in September 2022, yet just under an hour below the historical monthly average.

The new orders index in September increased to 47.5 compared to 46.6 in August. The 12-month moving average of the new orders index has increased to 50.3 from 50.1 in August 2023.

In September, the 12-month moving average of average weekly unemployment claims increased from 2,016 to 2,055. Unemployment claims were 38.01% above September 2022 claims, yet 32.43% below average historical claims for September.

Four of the 28 Iowa-based or Iowa-concentrated publicly traded companies on the Iowa Stock Market Index gained value, and one of the 10 financial-sector companies increased. With over two-thirds of the stocks experiencing losses, the stock market index decreased to 118.79 in September from 122.06 in August.

In September, residential building permits were 931, down from 1,174 last year. The 12-month moving average decreased to 917 in September from 937 in August. September permits were 20.7% below September 2022, and 17.0% below the monthly historical average.

The agricultural futures profit index showed expected profit decreases in both crop commodities and cattle during September. Hogs experienced expected profit increases. Compared with last year, new crop corn prices were 29.0% lower while soybean prices were 6.8% lower. The September crush margin for cattle decreased 7.5% from August while the crush margin for hogs increased 6.9%. The crush margin involves the market value of the animal minus its initial cost and the cost of feeding it.

Diesel fuel consumption decreased 13.0% between September 2022 and September 2023. The 12-month moving average decreased to 65.92 million gallons in September from 66.67 million in August.

The full report is available online.