The Rural Economy Could Be On The Mend

The Associated Press reports that a new survey of rural bankers in 11 Midwest and Plains states suggests the region’s economy remains weak, but there are signs it may soon be in better shape. The bankers who responded to the monthly “Rural Mainstreet” survey say they’re more optimistic about the future despite low farm equipment sales.

The survey’s index ranges between 0 and 100, and any score below 50 on the index suggests a contracting economy over the next three to six months in rural areas dependent on agriculture and energy production. The survey covers Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming.

The survey’s confidence index, which gauges expectations for the next six months, rose to 45.6 in April from March’s 35.9.

The relatively strong dollar has hurt demand for U.S. agricultural and energy commodities. Weaker crop prices have weighed down farmland prices and farm equipment sales. The farmland price index improved to 41.2 in April from March’s record low 33.1. But the index remains well below the peak of 81 it set in January 2008.

The farm-equipment sales index dipped to 29.6 in April from March’s 30 reading. Hiring in rural areas continues to be weak. The April new-hire index fell to 15.8 from March’s 23 reading. The rural bankers reported healthy numbers for their own businesses. The loan volume index rose to 50.8 in April from March’s 46.2. Only 12% of the bankers reported that loan delinquencies grew significantly, and 52% said loan delinquencies were up only moderately.

The checking deposit index dipped to 66.7 in April from 67.4 in March. The index for certificates of deposit and other saving instruments also declined slightly to 61 in April from 62.9 in March.