Rural index climbs for 4th straight month, but it’s still weak

A survey of rural Midwestern bankers showed improvement for the fourth consecutive month but still pointed to economic weakness in the 11-state region.

The Rural Mainstreet Index rose to 40.9 in December from 38.4 in November and 37.5 in October.

A reading of 50.0 is considered growth neutral. Anything above 50 indicates economic growth; anything below, economic contraction.

The index has been below the growth-neutral point for 22 straight months.

The decline in farm income, related to lower prices for agricultural commodities, continues to weigh on the rural economy, said Creighton University economist Ernie Goss.

Goss and Bill McQuillan, CEO of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005.

Declines in farm income and the global economic downturn have negatively affected farmland prices and sales of farm equipment.

But there are pockets of strength.

Dan Coup, CEO of First National Bank in Hope, Kan., reported that several recent land auctions resulted in steady to slightly higher prices, Goss said.

Coup indicated that local farmers and ranchers, not outside investors, were purchasing the land.

The corn harvest remains significantly behind schedule, with 13 percent of the bankers reporting that less than 75 percent of the crops are harvested.

The monthly confidence index, which tracks bankers’ economic outlook for six months from now, rose to 53.7 from 50.1 in November, but it was down from October’s 58.7.

Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming responded to the survey.

Nebraska’s index climbed to 42.0 in December from 39.5 in November. The farmland-price gauge slipped to 46.0 from November’s 46.7.

In Iowa, the index edged up to 40.7 from November’s 38.0.

Contact the writer:

444-1050, pat.waters@owh.com

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