Iowa economic indicators down again in April

DES MOINES - Iowa's leading economic indicators continued their downward arc in April, according to analysts at the state Department of Revenue.

The department's index - a gauge of Iowa's economic activity - dropped by 1.7 percent to 101.3 in April, marking the second-largest, one-month decline in its history.

It ranks behind the 3 percent drop posted one month earlier in March due to negative impacts brought on by the coronavirus pandemic.

Only one of the index's eight components - diesel fuel consumption - posted positive results in April.

The components that contributed negatively to the index were average weekly unemployment claims (inverted), the new orders index, average manufacturing hours, the agricultural futures profits index, the Iowa stock market index, residential building permits and national yield spread.

According to state officials, the index was constructed to signal economic turning points with two key metrics that, when seen together, are considered a signal of a coming contraction: a six-month annualized change in the index below negative 2 percent and a six-month diffusion index below 50.

The six-month annualized change in the index fell to negative 10.7 percent in April - from negative 7.4 percent in March. That was the 18th consecutive month of negative value and the second month below a minus 2 percent change.

The six-month diffusion index remained unchanged at 37.5 in April from March.

Also, Iowa's non-farm employment index saw its fifth straight month of decline and posted the largest one-month drop in that indicator's history as well, according to the state revenue agency report.

The data suggested the Iowa economy would weaken through the fourth quarter of fiscal 2020, which ends June 30, and the first quarter of fiscal 2021 and that employment growth would weaken over the next three to six months.

With the historical employment impact of the COVID-19 pandemic, state officials said the 12-month moving average of weekly unemployment insurance claims in Iowa jumped to a level not reached since November 2009.

Also, the Iowa unemployment rate increased to 10.2 percent in April from 3.7 percent in March.

'April is the first month we have seen the real impact of the pandemic on our unemployment rate,” said Beth Townsend, director of Iowa Workforce Development. 'We remain hopeful that as we reopen the state and more people return to work, the rate will decrease quickly and this unprecedented rate will be a very temporary one.”

Among the various indicators, April residential building permits were 14.2 percent below one year ago (858 vs 1,000), and 29 percent below the historical average for April (1998-2019).

The 12-month moving average of residential building permits decreased from 986 in March to 974 in April - marking the 17th month in a row that the 12-month moving average has registered below 1,000 permits.

Decreases in permits were concentrated in single-family homes, down from 949 in April 2019 to 682 in April of this year.