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Bankers survey index rises; shows signs of trouble

Bankers survey index rises; shows signs of trouble

January 20th, 2012 in News

OMAHA, Neb. (AP) - A monthly survey of bankers in 10 Midwest and Great Plains states released Thursday puts the report's overall index at a 4 1/2-year high, but other indicators show trouble ahead for the rural economy.

The Rural Mainstreet Index rose from 59.7 last month to 59.8 for January, the highest since June 2007. Any time the index, which ranges from 1 to 100, is above 50, it suggests the economy will grow.

But indexes tied to bankers' responses on questions about farmland prices, loan volume, rural housing and hiring all dropped from last month.

The results indicated a "leveling off" in the growth of the rural economy, said Creighton University economist Ernie Goss, who oversees the survey.

The survey covers Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

Bankers were asked what they expected to be the biggest economic challenge for 2012. Twenty-six percent said a decline in agriculture commodity prices represented the largest threat. Some 25 percent indicated that a shortage of jobs posed the greatest threat, while 15 percent cited a lack of skilled workers.

The farmland price index sank to 74.3 from 84.1 in December, and the farm equipment sales index slipped to 72.3 from 73.8.

"Our bank is monitoring land sales carefully, aware that another real estate bubble may be forming, and concerned that it may burst," said Kathy Thuman, president of Farmers State Bank in Maywood, Neb.

The loan volume index for January slumped to 45.5 from December's 50.8, and the hiring index declined to 51.5 from 54.6.

The economic confidence index, which reflects expectations for the economy six months out, sank to 56.1 from December's 61.8.

"Difficulties in Europe and potential conflicts with Iran combined to push economic confidence lower," Goss said.