Reports show Iowa economic recovery may be slowing down

Three reports issued Monday show Iowa's economic recovery may be slowing, despite optimistic assessments from state business leaders.

The Iowa Business Council's second-quarter Overall Economic Outlook Survey Index, at 64, was unchanged from the first quarter, but below the 68 recorded in the second quarter of 2012.

The IBC is comprised of the chief executives of Iowa's largest employers and the Iowa Bankers Association as well as the three Regents university presidents.

The index tracking sales is 70, down a point from the first quarter and three points below the second quarter of 2012. All the CEOs expect steady or improving sales over the next six months, while none expect sales levels to decline.

The overall employment index is 58, two points lower than the first quarter and five points behind this time last year. Eighty-six percent of the responders expect hiring levels for the next six months to remain steady or grow.

The index tracking capital spending expectations climbed to 64 in the second quarter, from 61 in the first quarter. The employment index fell to 58, from 60 quarter-over-quarter.

Stan Askren, IBC chairman and chief executive officer of office furniture manufacturer HNI Corp. in Muscatine, said business leaders remain optimistic but guarded in their assessment of the economy.

A monthly report from the Iowa Department of Revenue would appear to complement that assessment of the state's economy in succeeding quarters.

The Iowa Leading Indicators Index held steady at 106.1 in April for a fourth consecutive month after remaining at 106.0 from October through December of 2012. The two most positive contributors in April were building permits and the new orders index.

The 12-month moving average for building permits rose to the highest level since March 2008. In April 2013, the 12-month moving average for building permits increased 1.9 percent to 840 from 824 in March, but remained 27.3 percent below the historical average for April (1998-2008).

The new orders index was a positive contributor for the first time in six months, exceeding the value of 69 from a year ago. The monthly index value jumped to 77.9 from the March value of 69.5 after slowly rising from the low of 53.5 in November 2012.

The agricultural futures profits index was a negative contributor for the fifteenth consecutive month. The 12-month moving averages of expected profits for livestock fell again this month, while expected profits for both crop components also decreased.

The national yield spread decreased to 1.70 in April from 1.87 in March. Long-term rates dropped after a disappointing national employment report raised concerns the economy was slowing.

The only other negative contributor in April was diesel fuel consumption. The 12-month moving average decreased to 55.34 from 55.37 in March after four months of increases.

The MidAmerica Business Conditions Index for May, compiled by Creighton University's Economic Forecasting Group, showed Iowa's economy expanding for the fifth straight month.

The overall index from a survey of supply managers rose to 70 for May from April's 69.1. Components of the index were new orders at 75.3, production or sales at 75.2, delivery lead time at 59.6, employment at 70.9, and inventories at 68.9.

Ernie Goss, the Creighton University economics professor who supervises the survey, said durable and nondurable goods producers in Iowa experienced healthy growth in May, but he sounded a note of caution.

"I expect somewhat slower growth in agriculture to pull overall state growth somewhat lower, but it will remain positive and healthy," Goss said.