The Midwest’s rural economy took another step backward in August, judging by a survey of nonurban bankers, although their outlook improved slightly.
The survey yielded a Rural MainStreet Index of 32, well below the index of 50 that would be growth-neutral, according to Creighton University economist Ernie Goss. The index was 32.6 in July and 38.9 in August 2008.
The index has declined for three months in a row but is above its record low of 16.9 in February. It has been below 50 for 18 months.
The outlook index, based on the bankers’ view for their local economies six months from now, was 46, up from 44.6 in July and 36.1 in August 2008.
Goss and Greeley, Neb., banker Bill McQuillan originated the survey, which this month received responses from 148 bank executives in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming.
Goss said the weak national economy has affected the farm sector significantly, with lower land prices and farm equipment sales. Despite higher crop yields, the bankers in the survey said they expect farm income to decline from 2008 because of lower grain prices.
Farmland prices have been down for 10 straight months, and farm equipment sales have been down for 11 months.
Hiring remained “very frail,” Goss said, declining for 20 straight months. Rural areas have lost nearly 5 percent of their jobs in the past year. Retail back-to-school sales may be the worst in several decades, he said.
Iowa’s index for August was 27.8, down from 30.6 in July. Nebraska’s index was 35.9, up from 35.6 in July.
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