Iowa leading indicators decline in August

The Iowa Leading Indicators Index decreased to 109.2 in August 2014, from 109.3 in July, marking only the second decline in the past 12 months.

The last time the index fell was in September 2013.

Employment growth continued in August, one month shy of four years with a 0.07 percent increase, which is the weakest monthly growth since April 2013.

The index's recent moves suggest that employment growth will continue through the fall, although at a potentially weaker pace.

Two positive contributors in August were the agricultural futures profits index and average weekly manufacturing hours.

The overall gain in the agricultural futures profits index was driven by hogs and cattle. Near-futures contract livestock prices continued at record levels, with hog prices for August up 12.2 percent over last year.

At the same time, Iowa State University reported that production costs for hogs have fallen for the 13th month in a row - down 8.0 percent from August 2013. The opposing changes pushed the 12-month moving average of expected profits for hogs to 41.4 cents per pound.

Cattle futures prices increased 24.6 percent, while production costs continued to fall year-over-year - down 2.5 percent compared with last August - lifting expected profits for cattle to 8 cents per pound.

Average manufacturing hours for August at 42, compared with 41.2 in August 2013, was 0.8 hours above the historical average for the month. Rising to 42.01 hours, the 12-month moving average for average weekly manufacturing hours is at the highest level since February 2005.

There were six negative contributors to the overall index in August, with the largest contributors being the new orders index and new residential building permits.

The new orders index, which measures future manufacturing demand, plummeted from 70.5 in July to 57.8 in August, for the second month of negative change.

August building permits were down 22.1 percent from August 2013.