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Pre-crisis Iowa Leading Indicators report shows index decline in January


The Iowa Leading Indicators Index for January — which does not account for more recent changes in economic activity due to the global pandemic — decreased 0.3% to 106.5 in January, from a revised 106.8 in December. The drop in the January index was the largest one-month decrease since December 2018. With four of the eight components contributing positively, the monthly diffusion index increased to 50.0 in January from 43.8 in December, according to the Iowa Department of Revenue report.

The annualized six-month change was a decrease of 0.9% in January from a revised 0.4% decrease in December. The six-month diffusion index regressed to 50.0 in January from 62.5 in December 2019. Four of the eight component indicators (diesel fuel consumption, Iowa stock market index, national yield spread, and residential building permits) experienced an increase of greater than 0.05% over the last half-year. The decrease in the six-month diffusion index is largely due to the agricultural futures profits index experiencing a decrease of greater than 0.05% over the last half-year.

The four components that were positive contributors to the ILII in January, in order from largest contributor to smallest, were diesel fuel consumption, residential building permits, average weekly unemployment claims, and the new orders index.

January 2020 residential building permits were 21.3% above January 2019 (511 vs. 425) and 1% above the average for January, going back to 1998. The 12-month moving average of residential building permits increased to 940 in January from 933 in December 2019. January marks the 14th month in a row that the 12-month moving average has registered below 1,000 permits. 

Average manufacturing hours, the Iowa stock market index, the agricultural futures profits index, and the national yield spread were the components that contributed negatively to the index. The 12-month moving average of manufacturing hours decreased to 40.97 in January from a revised 41.25 in December 2019 (the annual benchmarking lowered December hours from 40.5 to 40.1 hours). 

In January, the Iowa stock market index experienced gains in 14 of the 31 stocks, with four of the 11 financial sector company stocks experiencing gains. With over half of the stocks, including Wells Fargo Financial, John Deere and Tyson Foods, experiencing losses, the index decreased to 110.35 in January from 116.53 in December.

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