Iowa economy shows signs of slowing

For the first time in 11 months, the Iowa Leading Indicators Index decreased to 109 in October 2014 from 109.4 in September.

The Iowa Department of Revenue reported that only two of the eight components experienced positive changes, down from five in September. The 0.4 percent drop in October was the largest drop since April 2009.

The six-month annualized change in the index decreased to 0.7 percent from 2.4 percent in September remaining positive for the 18th consecutive month, but at the lowest level since May 2013. The six-month diffusion index decreased to 62.5 with building permits adding to extended weakness also seen in the new orders index and the national Treasury bill yield spread.

Employment grew again in October, continuing four consecutive years of positive growth. The 0.09 percent increase was down slightly from the revised 0.10 percent increase recorded in September.

The Iowa Leading Indicators Index's recent moves suggest that Iowa employment growth should continue into winter, although likely at a weak pace.

The two positive contributors to the overall index in October were average weekly unemployment claims and the agricultural futures profits index.

The 12-month moving average of weekly unemployment insurance claims decreased in October by 0.3 percent with claims for the month down 4.1 percent from last October.

The agricultural futures profits index was a positive contributor for the fourth month in a row. Grains continued to show weakness with average soybean futures prices 24.7 percent lower than last October and corn futures prices down 20.4 percent.

The overall gain in the AFPI was again driven by hogs and cattle. Near futures contract livestock prices continued at near record levels with hog prices for October up 7.7 percent over last year.

At the same time, Iowa State University reported that production costs for hogs fell, down 1 percent from October 2013.