Rural Mainstreet Index finds slow growth

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Posted: Friday, April 18, 2014 12:00 am

The Midwest's rural areas continue to show slow growth this month, with the promise of improved prices for farm products brightening the future.

A survey of bankers in 10 states by Creighton University economist Ernie Goss yielded a Rural Mainstreet Index of 53.2, up from 50.1 in March. An index of 50 on the 100-point scale is neutral, with higher numbers indicating growth and lower numbers decline.

Goss said he expects moderate growth ahead, slower than last year.

This month's survey had responses from 193 bank executives in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

The index had dipped into negative territory in February because of lower grain prices and faltering farmland prices. Goss said he expects “even more downward pressures on farmland prices and cash rents” as interest rates rise.

The survey's index of farmland prices was 42.9, the fifth straight month of decline following five years of steady increases.

But Goss said rising commodity prices prompted the bankers to expect improved growth ahead. The survey's “confidence index” for the economy six months from now was 54, up from 47.3 a month ago.

Farmers continued to slow their equipment purchases, with the bankers' responses showing a sales index of 36.7, the 10th straight month showing decline. Indexes for hiring and home sales showed growth, and retail businesses were steady.

Iowa's overall index was 53.5, up from 49.8 in March. Its farmland price index was 41.4, up from 37.6 in March.

Nebraska's overall index was 53, up from 49.5 in March, with a farmland price index of 35.8, up from 27.7 in March.

Rural Mainstreet Index

The figures are from a survey of 193 bank executives in rural and non-urban areas of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

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Category March April
Overall 50.1 53.2
Loan volume 65.5 73.1
Checking deposits 65.5 65.1
CDs 42.5 42
Ag land prices 40.9 42.9
Ag equip. sales 29.3 36.7
Home sales 51.8 63.8
Hiring 60 64
Retail 49.2 50
6-month forecast 47.3 54

An index of 50 is neutral. Higher numbers show expansion, lower numbers show decline. The forecast predicts economic activity in six months.

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