Nebraska, Iowa defy trend in rural economy, show signs of growth as the wider region’s decline persists

Source: By Steve Jordan, Omaha World Herald • Posted: Sunday, June 19, 2016

The rural Midwest’s economy is in its 10th straight month of decline, according to a survey of non-urban bankers, with farmland prices trending down for the 31st straight month despite recent increases in energy and farm commodity prices.

But Iowa and Nebraska went against the trend, showing growth in their rural economies and other positive signs.

The survey’s 10-state Rural Mainstreet Index was 43.9 on a 100-point scale. Numbers below 50 indicate decline.

The index was 40.9 in May and has edged toward the growth level in four of the past five months.

Creighton economist Ernie Goss said the improvement was “fragile” because prices for crops are still below last year — 9.5 percent for farm commodities overall, including 4 percent for grains and 15 percent for livestock.

Prices peaked in 2011, and many farmers bought new equipment. But as crop prices dropped, equipment sales declined, too. June’s farm equipment sales index was a “dismal” 12.8, Goss said, even though a slight improvement from 10.7 in May.

Nebraska’s index jumped from 43.3 in May to 63.2 in June, the highest of the 10 states.

Iowa’s index followed, increasing from 40.3 in May to 59.1 in June.

Goss said the two states’ improvement may be tied to gains in food processing and alternative energy, including recovery in the ethanol business and, in Iowa, installations of wind-powered energy facilities.

Nebraska’s farmland price index increased from 44.5 in May to 49.7, and its hiring index rose to 58.8 from 49.3.

Iowa’s farmland price index was 51.5 in June, up from 47.3 in May. Its hiring index was 59.4, up from 50.3 in May.

The indicators come from a survey of 188 bank executives in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming

For the region, the index for farmland was 32.3, up from 28.4. Bank loan volume, affected by seasonal borrowing, showed an index of 73.5, down slightly from 77.9 in May but still well into the growth zone.

Goss said hiring showed growth, with an index of 53.2 in June, but overall rural employment is down about 1 percent from a year ago, compared with a 1.5 percent increase in the region’s urban areas.

The bankers remained pessimistic about their local economies for the coming six months, with a confidence index of 42.8, improved from 38.4 in May most likely because of the commodity price gains, Goss said.

Home sales in rural areas remained strong, with an index of 64.6, but retail sales continued to be weak, with an index of 40.9.

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