The Iowa Leading Indicators Index decreased 0.4% to 108.4 in January 2023 from a revised 108.8 in December 2022.

The monthly diffusion index increased to 37.5 in January from 25.0 in December. The six-month diffusion index decreased to 37.5 in January from 62.5 in December. 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, then the assigned values for all the components are added together.

The Iowa nonfarm employment coincident index recorded a 0.2% increase in January, the 22nd month of growth. This index is computed using a complex computation based on the Conference Board’s Leading Indicators Index.

Five of the eight component indicators decreased more than 0.05% over the last half-year: Agricultural futures profits index (AFPI), diesel fuel consumption, national yield spread, new orders index, and residential building permits. The decrease to the six-month diffusion index is from diesel fuel consumption and the AFPI going from positive change to negative change.

Only three of the eight components increased month over month in January: Average weekly unemployment claims, average manufacturing hours and the Iowa Stock Market Index. Diesel fuel consumption, the national yield spread, the AFPI, residential building permits and the new orders index detracted from the index.

The 12-month moving average of average weekly unemployment claims decreased from 1,862 in December to 1,797 January. Unemployment claims were 25.96% below January 2022 claims, and 47.84% below average historical claims for January.

In the first month of 2023, the 12-month moving average of weekly manufacturing hours worked increased to 39.33 from 39.28 in December. Average hours were 39.0 in January, above the 38.4 hours in January 2022, yet nearly two hours below the historical monthly average.

During December 2022, 18 of the 28 companies on the Iowa Stock Market Index gained value and six of the 10 financial-sector companies increased. With just over two-thirds of the stocks experiencing gains, the index increased to 130.45 in January from 130.16 in December.

The new orders index in January increased to 45.7 compared with 38.4 in December. However, the 12-month moving average of the new orders index decreased to 55.56 from 70.37 in January 2022.

Residential building permits issued in January were at 355, down from 563 in January 2022. The 12-month moving average decreased to 1,043 in January from 1,060 in December. January 2023 permits were 1.64% below January 2022, and 24.6% below the monthly historical average.

During January 2023, the agricultural futures profit index saw expected profits decrease in both crop commodities and livestock commodities. Compared with last year, new crop corn prices were 5.7% higher while soybean prices were 4.0% lower. The January crush margin for cattle decreased 3.5% from December while the crush margin for hogs decreased 2.4%. Revisions to the grain break-even prices (23% increase in corn and 30% increase in soybeans) have led to weaker realized gains from the AFPI over the past several months, according to the report.

The yield spread fell further into inversion territory (moving below zero) in January, decreasing to -1.16% from -0.74% in December. January is the third month in a row that the yield spread has been in inversion. The long-term rate decreased 9 basis points while the short-term rate increased 33 basis points.

Diesel fuel consumption decreased 12.0% between January 2022 and January 2023. The 12-month moving average decreased to 67.63 million gallons in January from 68.24 million in December.

The full report is available online.