An index reflecting the Midwest’s nonurban economy showed decline for the sixth month in a row, although slightly less than a month ago, because of low agricultural and energy prices and a downturn in manufacturing.
Creighton University economist Ernie Goss said that since June 2015 farm prices are down 8 percent and fuel prices are down 22 percent, squeezing income for rural communities in the 10-state area.
His survey of 172 bankers yielded a Rural Mainstreet Index of 37 on a 100-point scale, with figures below 50 indicating economic decline and above 50 showing growth. In January, the index was 34.8.
Asked about their local economies in the coming six months, the bankers’ responses yielded a confidence index of 30.4, compared with 29.4 in January. Weakness in agriculture and energy is hurting rural job markets, Goss said.
The survey’s farmland price index was 29.8, the 27th straight month indicating decline. Goss said price trends vary across the region, which consists of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
Goss said a banker in Creighton, Nebraska, reported an auction sale price of $8,650 per acre for irrigated farmland.
The farm equipment sales index, which hit a low of 7 last month, remained weak at 11.3. Farmers have slowed their purchases because of the lower grain and cattle prices, in turn hurting equipment manufacturers.
The strong dollar makes American goods more expensive on export markets, reducing demand for U.S. grain and meat, Goss said.
Home sales improved, although retail sales remained week, the survey said.
Iowa’s index was 40.4, up from 38.2 in January. Its farmland price index was 45.9, up from 36, and its hiring index was 54.5, down from 55.1.
Nebraska’s index was 37, up from 35 in January. Its farmland price index was 29.8, up from 19.8, and its hiring index was 48.6, down from 49.2.
Rural Mainstreet Index
The figures are from a survey of 172 bank executives in rural and nonurban areas of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming
|Ag land prices||23.9||29.8|
|Ag equip. sales||7||11.3|
An index of 50 is neutral. Higher numbers show expansion, lower numbers show decline. The forecast predicts economic activity in six months.