Iowa economic index marks more decline

DES MOINES – Iowa's economic indicators keep pointing down.

May marked the 14th straight monthly decline in the state Department of Revenue's index of leading indicators with only faint glimmers of hope emerging on the state's economic horizon.

“There is hope that the second half of 2009 will see at least a flattening out and that steep decline will stop,” said Amy Harris of the department's tax research and program analysis section. “We're hoping, but there are no widespread signs that things have reached a bottom.”

The only positive contributor in the May report was an increase in the treasury bond yield spread, while seven other indicators continued a downward march that indicated widespread weakness in the Iowa economy, according to the monthly report.

Economic negatives occurred in the average weekly manufacturing hours, unemployment insurance claims, agricultural futures prices, new residential building permits, the value Iowa companies in the U.S. stock market, and new orders.

While the new orders index remained down compared to May 2008, the indicator's monthly value “inched into expansion territory” for the first time in a year – a development that Harris called cause for optimism because that was one of the positive signs that signaled a rebound from the recession of the early 2000s.

Harris said she was watching for similar improvements in building permits and manufacturing hours but they have yet to materialize. Iowa continues to lose jobs with a slackening demand for manufacturing goods and unemployment continues rise, although the growth in jobless benefit claims – while still quite high -- appear to be flattening out, she said.

“We're still seeing a lot of weakness in the labor market,” Harris noted. The state's agricultural sector also continues to struggle with weak livestock and grain prices compared to strong markets a year ago.

June's indicators likely will post a favorable showing, she said, but only because they will be compared to the disaster-ravaged data from June 2008.

“It's not so much that this June is going to look good; it's just that last June was so bad,” Harris said. “Next month is going to be a strange month. There will be a lot of caveats.”