Banker survey sees decline

Rural economies in the Midwest took a step backward on the road to recovery this month, according to a survey of bankers in 10 states.

The Rural Mainstreet Index fell for the second time in three months, after rising earlier, and continued to indicate economic decline based on a survey of 165 executives at rural banks in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

The survey’s home sales index indicated growth for the first time since June 2007.

The overall index, 44.2 on a scale of 1 to 100, was below the mid-level point that would indicate economic growth. The index had been climbing toward 50 and reached 47.4 in March before the latest decline.

It has been below the growth-neutral point for 26 consecutive months, said Creighton University economist Ernie Goss. He said the overall index for April showed a decrease despite improvements in most of the survey’s individual categories. The bankers rate the overall economic climate as a separate question.

The survey had some positive results, indicating that farm equipment sales were growing for the first time since September 2008 and that farm and ranch land prices were increasing for the third straight month.

Bankers also were optimistic about the economy six months from now, with their responses yielding an index of 60.2, up from 45.6 a year earlier.

“While the negatives are clearly getting less negative as the agricultural economy improves, urban economies in the area are outperforming the rural,” said Goss, who originated the index with Greeley, Neb., banker Bill McQuillan,

Bankers said improved livestock prices are helping farmers and ranchers. Goss said he expects farm and ranch land prices and farm equipment sales to remain healthy in the months ahead.

The bankers’ responses on bank loans and deposits indicated continued growth, Goss said, but hiring and retails sales remained below growth levels. The hiring index has been below 50 for 28 months in a row, but he said job losses reported for April were about one-fourth the level of six months ago.

Iowa’s index was 43, down from 48 in March, despite increases in farmland and farm equipment indexes.

Nebraska’s index was 44.6 in April, down from 49.7 in March. The survey also indicated stronger farmland prices and ag equipment sales.

« Money

Share