Iowa's economy continues to recover

DES MOINES – Iowa's economy dropped so low last year that things are looking up by comparison, state officials said Thursday.

The state's leading indicators index posted its fifth monthly gain in February but Amy Harris, a senior fiscal analyst with the Iowa Department of Revenue, said the strong showing should be tempered by the fact that the numbers are being compared to the depths of Iowa's economic recession.

“We're seeing some strong gains right now but the levels at which these different components are are still well below average,” Harris said. “We are in a recovery stage. We're not back to economic growth or even normal economic activity for the state.”

Six of the eight leading Iowa indicators were up again in February, Harris said, with yield spread and diesel fuel consumption the only negative factors. She said the yield spread was more related to federal budget and economic factors and diesel consumption was down due to snowy conditions that impeded travel in February.

“Otherwise, we're seeing gains all across the board,” she said. “We're gaining ground in almost all the sectors.”

February's positive contributors were in average weekly manufacturing hours, the Iowa stock market index, new orders by purchasing managers, unemployment insurance claims that were on the decline, new residential building permits, and the agricultural futures price index, she said.

While the overall components of economic activity in Iowa climbed from 96.5 in January to 97.2 in February – where 100 represents Iowa economic activity in 1999 – the non-farm employment measure fell slightly again in February, marking the 16

^th

straight monthly decline.

Harris noted that weekly manufacturing hours rose to 40.1 in February, which was well above the 36.6 reported in February 2009. However, the historical average for that month from 1996 to 2008 was 41.1, so the index shows strong gain but partly because last year's level was so bad, she said.

“Even once we start seeing gains, we still have to build back to the levels of where employment was in November 2008 when it started falling,” Harris said.

While the indicators have performed positively for five months, the “window” for the full rebound likely spans three to nine months so it likely will be mid-summer before Iowa starts to experience employment gains based upon the current index trend line, Harris said. The current movement is encouraging but it will still take some time before Iowa's economy is back to normal and eventually growing, she added.

Iowa's leading indicators index hit a peak of 107.45 in March 2008. The low reading was 94.55 last September.

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