The rural Midwest's economy continues growing at a healthy pace, a monthly survey showed Thursday, despite the possibility of slightly lower farm income this year.
Farmland prices, which have been setting records, also continue to rise but at a slower pace for the seventh time in the past eight months, according to the Rural Mainstreet Index survey of bankers in a 10-state region.
Creighton University economist Ernie Goss said the bankers, on average, expect farm income this year to be 3 percent below last year's relatively high level.
“Ample moisture has boosted the rural economy and the bankers' economic outlook,” Goss said.
He and Greeley, Neb., banker Bill McQuillan originated the survey, which this month received responses from 186 bank executives in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
The overall index was 57.3 on a scale of 100, with numbers over 50 indicating growth. That's down from 60.5 in June but ahead of last July's 47.9.
Energy production is becoming more important to the rural economy, Goss said, including wind-generated electricity in Nebraska, Iowa and other states that don't have large coal or petroleum reserves.
Construction of 45 wind generators near Odell, Neb., should add to the area's economy over the next six or seven months.
The region's farmland price index was 58.2, down from 58.4 in June but still showing growth as it has since February of 2010. Goss said lower commodity prices and expected lower farm income are slowing the land price increase, a trend he expects to continue.
Farm equipment sales also softened in July, with an index of 50, down from 53.2 in June. Goss said farmers are becoming more cautious about economic conditions.
Bank loan volume rose and rural hiring and home sales remained strong, the survey indicated. Goss said he expects agriculture and energy to continue adding jobs, but slowly.
The bankers' outlook for the coming six months produced a confidence index of 56.6, down from 60 in June. Goss said crop conditions are good, but lower prices for commodities tempered their expectations.
Nebraska's index was 58, up from 56.5 in June, even though some parts of the state have had dry weather and deteriorating pasture conditions. The state's farmland price index was 48.5, down from 59.2 in June.
Iowa's index was 62.3, up slightly from 62.2 in June. The state's farmland price index was 54.6, up from 49.6 in June.
Correction: A previous version of this story incorrectly reported how many bank executives took part in the survey.