DES MOINES – Iowa’s slowly recovering economy continued its gradual upward arc in May.

The state’s index of leading economic indicators rose to 100.0 in May from 99.4 in April, marking the eighth straight monthly increase with six of the eight index components posting gains, according to the index issued by the state Department of Revenue on Thursday.

Amy Harris, a senior fiscal analyst with the department, said the 0.6 percent monthly increase was a sign the Iowa economic is returning to more normal patterns after a volatile ride that saw the index plunged from a peak of 107.45 in March 2008 to a low reading of 94.55 last September. The index was established 11 years ago with 100.0 representing economic activity in 1999.

“We’re not having these huge changes compared to last year because we’re starting to see normal levels on some of the components,” Harris said.

“The fact that we’re seeing a 0.6 percent increase still suggests that’s a positive sign for where we expect employment to go, that we should start seeing employment going up soon based upon our measures.”

Non-farm employment measured by the index fell slightly in May but marked the 19th consecutive monthly decline, but Harris said she expected to see positive numbers in late summer or early fall based on the continued positive movement in the overall indicators. She noted that Iowa’s unemployment claims remain relatively high compared to historical averages due to high jobless rates around the state.

The six components of the Iowa Leading Indicators Index that made positive contributions were average weekly manufacturing work hours, new orders, inverted jobless insurance claims, diesel fuel consumption, new residential building permits and the Iowa stock market index. Negative contributors were the agricultural futures price index and the national yield spread – a component that was impacted by economic uncertainty in Europe and the volatility of the U.S. stock market.

Officials continued to caution that the improved index readings were based upon comparisons with 2009 data when the state was experiencing the depths of the economic recession.

Iowans employed in manufacturing worked an average of 41 hours in May, down from the revised April hours report of 41.5 hours but well above the 38.1 hours reported in May 2009.

Nine of 34 Iowa publicly traded companies followed by the index experienced an increase in value in May, including seven of the 12 financial-sector companies. Even though the majority of Iowa stocks experienced losses in May, the 12-month moving average was still a positive contributor when compared to the weak values seen in 2009.

Purchasing managers in Iowa reported increases in orders received for manufacturing, with the May value of 81.1 being the highest index reading since April 2004.

The 12-month moving average of weekly unemployment claims fell to 6,435 in May, which was 39.8 percent below May 2009 claims. However, May’s initial claims were 91.6 percent above historical average claims for the same month.

Building permits for residential construction rose 10.4 percent in May over the prior month. While a positive component, the May permits were 48.8 percent below the historical average for the same month.

Diesel fuel consumption, an indicator used to measure transportation activity, rose 7.6 percent in May.

During May, the 12-month moving average of expected profits for hogs and cattle dipped slightly. Also, the difference between the yield on 10-year Treasury bonds and 3-month Treasury notes fell to a spread of 3.26 basis points.