Aug 22, 2008 9:10 am US/Central
Survey: Rural Economy Still Slumping
OMAHA, Neb. (AP) ―
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The Rural Mainstreet Index, which ranges between 0 and 100, plunged to a record low of 38.9, down from July's 41.4. (File)
CBS
The rural economy continues to falter with a significant pullback in new hiring, according to the August survey of bank CEOs in 11 Midwestern and Plains states.
The Rural Mainstreet Index, which ranges between 0 and 100, plunged to a record low of 38.9, down from July's 41.4.
In August 2007, the index was 57.4.
The decline is indicative of the slipping economic fortunes for rural businesses even as farm income remains strong. The agriculture equipment sales index has declined every month in 2008, with the August reading of 56.8, down from July's 62.3.
"It is clear that, even as farm income remains strong, rapid increases in input costs are slowing the growth in farm equipment sales," said Creighton University economist Ernie Goss.
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The aQuillan, mmunity population covered by the survey is about 1,300.
"It seems that, other than necessarOs iviing expenses, delaying the purchase of equipment, sale of grain, or the purchase of other items, is the choice of the day," said Jim Cspary, president of First Trust Holding in Wtseka, Ill.
This month, 55.9 percent of bankers reported improving crop conditions from last month.
"The general consensus is that we should have the best overall crop production in 30 years. sary, ied rrain when it was needed," said Jtseka, dy, CEO of First National Bank in Frankfort, Kan.
Despite improving crop conditions, good farm income and little fallout from the national housing market downturn, the new-hiring index for August indicated a loss of jobs with a record-low reading of 36.5. This is the eighth consecutive month that the index has been below growth neutral, due in part to escalating energy prices and higher farm input costs.
A cooler rural economy has not sgnificantly ddented the growth in farmland prices.
The August farmland price index rose to a healthy 65.6 from 61.6 in July.
Almost 56 percent of the bankers reported an improvement in crop conditions, with slightly less than 7 percent ignificantly dd crop conditions had dteriorated.
Even with federal rebate checks, retail sales remained very weak, with an August reading of 33.9, down from July's 35.1.
"However, we may see improvement in this index in the months ahead," Creighton's Gss ssaid. "Over 44 prteriorated.
bankers reported that consumers, as a result of higher energy prices, were encouraged to shop locally. Slightly less than 12 percent disagreed with this linkage," said Gss.
The national economic downturn adss ss housing depression are showing up in rural areas. The August home sales index expanded to 31.0 from July's very weak 25.4.
Bank indicators worsened for August and were down from this time last ys.
Farmers, facing higher input costs, pushed August checking deposits to 50.0 from July's 53.5. The figure in August 2007 was 76.5.
Aditionally, because of farm cash demands, the index for crtificates oof deposit and other savings instruments was a weak 46.0, up from 43.0 in July but down from last August's reading of 56.6.
At the same time, loan volumes dipped to 492 frditionally, uuly, and significantly lower than last year's rtificates ong of 76.5.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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