Iowa economic indicators post best monthly gain ever

DES MOINES – Iowa's index of leading economic indicators posted its largest monthly increase in March, a clear signal that Iowa's is recovering from recession with positive signs starting to appear in the employment sector, officials said Monday.

“We are definitely seeing some positive signs about where the economy should be going,” said Amy Harris, a senior fiscal analyst with the Iowa Department of Revenue. “We're doing very well. The state is continuing on a recovery path and it's a good sign that we're on our way out of this recession.”

The March index rose to 98.2 compared to 97.2 in February – where 100 represents Iowa economic activity in 1999. That's a full point gain that marked the largest single increase in the index's 11-year history and was the sixth straight monthly increase among Iowa's leading indicators, Harris said. The Iowa index hit a peak of 107.45 in March 2008. The low reading was 94.55 last September.

On the negative side, non-farm employment fell by 0.08 percent for the month and continued a string of 17

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consecutive monthly declines, Harris noted. However, on a seasonally adjusted basis, the state has gained 15,400 jobs over the past three months – which was more than a fourth of the jobs lost in Iowa during the recession.

“On a seasonal basis, we've been hiring more than we would expect, but year over year it's still not pushed us above where we were a year ago,” she noted. The seasonal gain “is a very good sign and the indicators are suggesting that we should start seeing some gains on a non-seasonally adjusted basis in the next few months.”

Average weekly unemployment claims gradually are improving and average weekly manufacturing hours rose to 41 in March, which was up from 39.6 in February and 38.6 reported in March 2009 but still down slightly compared to the historical March average from 1996 to 2008, she said.

“Jobless claims are still way out of whack,” Harris said. “We know there are a lot of people out there who are still unemployed, under-employed and struggling. Whenever that's the case, it means the economy is not performing up to its full potential. That's troubling.

“Obviously, as job gains start to happen, we would expect the claims to start falling,” she added.

Overall, seven of the eight components measured in the Iowa leading indicators index in March were positive – the one exception was the yield spread, which was unchanged from February. Other positive contributors included the Iowa stock market index, new residential building permits, the new orders index, diesel fuel consumption and the agricultural futures price index.

Harris cautioned that part of the strength in March's numbers reflected the fact that the figures are being compared to months a year ago when the state was hitting the low point of the national recession.

“I think the magnitude of the increase has a lot to do with the fact of where we're coming from. But almost all of the indicators are showing absolute strength,” she said. “We're seeing a lot of positive signs but we still recognize that there's a lot of unemployment out there. That means that we haven't hit normal. We're not back to where we'd like to be.”

Gov. Chet Culver hailed the monthly index results as more evidence the state is “on the road to recovery” and that his economic development efforts are bearing fruit.

“We have worked with companies large and small through the Department of Economic Development to create the right incentives that attract and retain jobs,” the governor said in a statement. He singled out the Iowa Power Fund and I-JOBS bonding program as initiatives that are beginning to produce positive results.

“This report by the Department of Revenue demonstrates that our efforts are paying off,” he said. “However, there is still much work to be done, and as governor I will never stop working to grow our economy, and move Iowa forward.”

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