Economic growth was still underway in the rural Midwest in the past month but at a slower pace, according to a survey of bankers who adopted a less optimistic viewpoint about the rural economy in coming months.
Sales of farm equipment slowed for the second straight month, although farmland rent and land prices continued to grow, Creighton University economist Ernie Goss reported Thursday.
The survey's confidence index, which reflects the bankers' view of the economy six months from now, slipped to 46.1 on a scale between 1 and 100, with 50 marking neutral and lower figures indicating decline.
Goss said uncertainty around the pending federal farm bill and budget issues in Congress depressed the bankers' confidence. Declining grain prices are slowing the region's rural economic growth rate, encouraging farmers to store grain in hopes of higher prices later.
He said the storage strategy is “likely to pay off” in view of the Federal Reserve's recent decision to continue its support for economic growth.
The survey, taken before this week's Federal Reserve meeting, yielded a Rural Mainstreet Index of 52.4, down from 55.8 in August, which means continued but slower growth.
Farmland prices have risen steadily since February 2010, but the rate of increase declined for the ninth time in the past 10 months because farm commodity prices also are lower, Goss said.
He and Greeley, Neb., banker Bill McQuillan originated the survey, which this month received responses from 187 banks in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
The bankers said cash rents for farmland are up an average of 9.9 percent from last year. Employment is growing but overall rural employment is still down 1.2 percent from pre-recession levels, Goss said.
Farmers and manufacturers have boosted productivity without creating as many jobs.
Nebraska's index was 53, down from 56.2 in August but showed growth for the eighth straight month. The state's farmland price index was 48.1, up from 47.7, indicating declining prices. Hiring showed a slowdown at 49.3, compared with 53.4 in August.
Rural employment in Nebraska is down 1.3 percent from its pre-recession level, Goss said.
Iowa's index was 53.4, down from 56.9 in August, with a farmland price index unchanged at 53.2 and a hiring index of 52.7, up slightly from 52.4 in August. Iowa's rural employment is down 2.1 percent from before the recession.
The figures are from a survey of 187 bank executives in rural and non-urban areas of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
|Ag land prices||55.8||54|
|Ag equip. sales||49.2||48.3|
An index of 50 is neutral. Higher numbers show expansion, lower numbers show decline. The forecast predicts economic activity in six months.