Rural Index: Struggles continue

An indicator of the Midwest's rural economy took a downward turn after three months of improvement, reflecting economic decline for the 16th straight month.

The Rural MainStreet Index for June fell to 34 on a scale of 100, down from 36.2 in May but up from February's record low of 16.9. Any figure below 50 indicates a decline.

The figures indicate that weaker farm income, business closings, cutbacks by manufacturers and a weak U.S. economy continue to hurt nonurban areas in the region, said Creighton University economist Ernie Goss.

He 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.

Increases in the index the previous three months may show that the severity of the downturn is lessening, Goss said.

Indexes were below 50 for farmland prices for the eighth straight month and for farm equipment sales for the ninth straight month, although both were up from May. The hiring index has indicated decline for 18 consecutive months, although the rural housing market may be stabilizing.

The survey's confidence index showed that the bankers expect economic growth six months from now, although the index was slightly below the May figure.

“Bankers in our survey clearly think that the worst of the economic downturn is behind us,” Goss said.

Iowa's overall index for June was 32, down from 37.2 in May. Nebraska's overall index was 37, down from 40.6 in May.

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