Business appears to be slowly improving in rural areas of 11 Midwest and Plains states, but the economy there remains weak, according to a new survey of bankers.
"The decline in farm income related to pullbacks in agricultural commodities from last year continues to weigh on the rural, agriculturally dependent economy," Creighton University economist Ernie Goss said.
The Rural Mainstreet survey's overall economic index rose to 38.4 this month from 37.5 in October and 36.5 in September, but it remained in negative territory below 50.
The index runs 0 to 100. Organizers say a score below 50 suggests the economy will contract in the next few months; above 50 indicates the economy will expand.
But the overall November index is well above the record low of 16.9 set in February.
The survey covers Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming.
The bankers surveyed said on average they expect crop income to be roughly flat this year while livestock income will down about 5 percent. If those figures hold up, that would be better than the income predictions the U.S. Department of Agriculture has made, said Goss, who developed the index in 2005 with Bill McQuillan, CEO of City National Bank in Greeley, Neb.
But many bankers say it's too soon to gauge farm income because of the wet fall weather.
"Crop income levels are a little hard to judge because of the delayed harvest," said Scott Tewksbury, CEO of Heartland State Bank in Edgeley, N.D.
Goss said the uncertainty about income has made farmers and ranchers more cautious about land and equipment purchases.
The survey's farmland price index improved to 45.6 in November from 43 in October.
The farm equipment sales index improved to 39.9 in November from 36.7 in October.
As the nation's unemployment rate topped 10 percent, the bankers survey's confidence index fell to 50.1 in November from October's 58.7.
Job losses are expected to continue in rural areas although the hiring index improved slightly to 36.3 in November. That crept up from 35.6 in October and 27 in September.
"Over the past 12 months, the region that we survey has lost almost 265,000 jobs. Recent surveys indicate that these job losses are likely to continue for the near term," Goss said.
Retail sales figures remained weak in the region. The retail sales index grew to 38.5 in November from October's 36.
The November home-sales index declined to 43.1 from October's 46.7.
The bankers reported less lending in November, and the survey's loan-volume index fell to 38.3 from October's 42.4.
The checking deposit index climbed to 66.4 in November from October's 61. And the index for certificates of deposit and other savings instruments slipped to 50.9 in November from 51.7 in October.
Almost 200 communities are represented in the survey, with the average community's population about 1,300.