Omaha A new survey of rural bankers in 11 Midwest and Plains states suggests the region’s economy remains weak, but the bankers believe the worst of the recession has passed.
The Rural Mainstreet survey’s overall index remained in negative territory in June when it slipped to 34 from May’s 36.2. The survey, which indicates the economic health of smaller towns and rural areas, has an index that ranges between 0 and 100. Any score below 50 on the index suggests a contracting economy over the next three to six months and any score above 50 indicates a growing economy over that time.
Creighton University economics professor Ernie Goss said weaker farm income, closures and cutbacks for rural manufacturers and a weak U.S. economy continue to drag on the region’s economy. But the overall index has improved significantly since setting a record low of 16.9 in February.
Goss and Bill McQuillan, CEO of City National Bank in Greeley, Neb., created the survey, which covers Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming.
The survey’s confidence index, which reflects what the bankers expect six months from now, offers some hope. It declined to 52.2 in June from May’s 56, but that index remains in positive territory, which is above 50.
“Bankers in our survey clearly think that the worst of the economic downturn is behind us,” Goss said.
The survey suggests the farm sector remains under pressure because of the recession. The farmland price index increased to 45.7 in June from May’s 39.2. The farm equipment sales index improved to 33.3 in June from May’s 28.3.
Rural hiring remained weak in June with the hiring index down to 29 from May’s 29.3.
“Over the past 12 months, rural areas of the region have lost more than 4.7 percent of their jobs while urban areas in the region have seen more than 3.1 percent of their jobs disappear over the past year,” Goss said.
The June retail sales index decreased to 33.7 from May’s 34.9.
The rural home sales index also declined in June to 45.9 from May’s 48.7.
However, the bankers reported healthy numbers for their businesses. The loan-volume index climbed to 56.1 in June from May’s 46.7.
“We certainly have plenty of dollars to lend to qualified buyers who are seeking financing,” McQuillan said.
The indexes for checking deposits and certificates of deposits both fell but remained above 50. The checking index registered 54.2 in June, down from May’s 68. The savings index dipped to 54.1 from 59.3.
Almost 200 communities are represented in the survey, with the average community’s population at about 1,300.