The rural economy grew slightly this month even as banker sentiments remain stunted by recessionary fears, according to Creighton University’s monthly survey of bank CEOs in rural areas of a 10-state region.
The Rural Mainstreet Index increased to 55.8 from 50.1 in April, its highest reading in a year. High borrowing costs, deposit outflows and labor shortages continued to limit the business confidence index, which increased by only a half-point to 38.5.
Ernie Goss, Jack A. MacAllister chair in regional economics at the Heider College of Business, said the region continues to experience slow growth. “Only 11.5 percent of bankers reported improving economic conditions for the month, with 88.5 percent indicating no change in economic conditions from April’s slow growth,” he added.
The region’s farmland price index fell eight points to 56.3. Farmland prices increased an estimated 4.3 percent over the last 12 months, and prices are expected to stagnate for the next 12 months. The index for farm equipment sales fell four points to 50.2 in April.
May’s loan volume index increased to 75 from 62.5 in April, and the checking-deposit index fell three points from last month’s record low to 22. “Two consecutive record-low checking deposit indices point to higher deposit outflows, even for community banks,” Goss said.
The index for certificates of deposit and other savings instruments fell four points to 70. According to the survey, the region had lost 41.5 percent of its banks to mergers and insolvencies from the 2008-09 banking crisis to the end of last year. Nearly 85 percent of bank CEOs expect banks to continue to report insolvency challenges.
Other report findings included:
- The new hiring index increased four points to 58 in April, even as labor shortages continued to constrain regional growth. Over the last 12 months, employment in the regional economy has increased 2.5 percent, compared to 1.9 percent for regional urban areas.
- The home-sales index increased by nearly 12 points to 55.8. “After 11 straight months of below-growth neutral readings, the home-sales index bounced above the threshold,” Goss said.
- The retail-sales index increased to 56 from 41.7 in April. “Bankers were pessimistic regarding the economic outlook for retail sales for the second quarter after an anemic quarter one,” Goss said.