OMAHA, Neb. – A new survey of rural bankers in 11 Midwest and Plains states shows continued weakness in the agriculture industry, but also signs of improvement.
The overall index for the Rural Mainstreet economic report released late Thursday rose to 47.4 in March from February’s 36.6. That’s more than double last March’s reading of 18.7.
The index ranges between 0 and 100. A score below 50 suggests the economy will contract in the next few months; above 50 indicates the economy will expand.
The index has remained below 50 for 25 consecutive months, said survey organizers Ernie Goss, a Creighton University economist, and Bill McQuillan, CEO of CNB Community Bank of Greeley, Neb.
“We can safely say that the negatives are getting decisively less negative as the farming and ranching economies improve,” Goss said. “Even so, economic conditions are weaker in the rural areas than in the urban areas of the region.”
Bankers were somewhat optimistic about future economic prospects. The monthly confidence index, which tracks bankers’ economic outlook six months out, rose to 54.3 after dropping in February from 59.7 to 52.8.
Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming are surveyed.
March’s loan volume index of 46.2 rose from 43.7 in February and January’s record low 33.4, but was still well below growth-neutral 50. Asked how new regulations requiring escrows of real estate taxes and insurance fees for home purchases would affect lending, more than 60 percent of bank CEOs surveyed said they expected to see fewer home loans.
The new-hiring index also soared in March to 45.7 from February’s 34.8, but only 14 percent of bankers said hiring was up from the last month.
“The Rural Mainstreet economy continues to lose jobs at an annualized rate of roughly 2 percent. While this is well above the rate of job losses for urban areas, the pace of job losses has slowed from the 4 percent pace experienced in previous months,” Goss said.
The March farmland-price index rose above neutral growth for the second consecutive month, to 58.2 from last month’s 52.8.