OMAHA, NEB. — A survey of rural bankers in nine Midwestern and Plains states, including Colorado, indicates a continued growth in economic activity, particularly in agriculture.
The overall economic index for the region advanced to 55.7 in January from 54.3 in December and 54.1 in November. An index greater than 50 indicates a growing economy over the next three to six months.
The survey includes Colorado, Illinois, Iowa, Kansas, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. The average community population covered in the survey is about 1,300.
The farm equipment sales index soared to a record 71.1 from December’s solid 65.9. And January’s farmland price index expanded to a record high of 81 from December’s healthy 77.3 and November’s 68.8.
David Kingland, president of Manufacturers Bank & Trust in Forest City, Iowa, said the agricultural economy is its strongest since the 1970s, partly due to new construction of wind farms and ethanol plants.
Job growth hit its weakest reading in nearly two years, with a January new hiring index of 46.6, down from December’s 50.6 and November’s 50.0. Results from surveys over the past five months indicate that jobs are being added at a pace well below average, even with record farm income.
Jim Caspary, president of First Trust Holdings in Watseka, Ill., said, “It remains to be seen how the stronger ag economy will offset the weaker consumer economy in our rural area.” Retail sales were a weak 42.4, down from December’s dismal 45.6.
Looking ahead to the rest of 2008, roughly 37 percent of bankers predicted the downturn in the housing market to be the biggest economic problem, while 11 percent said it would be the ability of businesses to provide health insurance for their employees.
January’s home sales index declined for the seventh straight month to 24.6, down from December’s 28.0, the lowest reading of the 2007.
Seventy-eight percent of bankers said the subprime mortgage meltdown has little to no impact on their banks. No banker said there was a significant impact, and 2.2 percent said there was modest impact.
“The direct affect has been little to none since we were not making subprime mortgage loans to our clients,” said Kent Siltman, president of Citizens First State Bank in Walnut, Ill. “However, the indirect effects in regards to market liquidity, the level of interest rates and the regulation that comes out of this from Washington will be significant.” Bank indicators were mixed for January. Loan volume declined to 51.7 from 52.2 in December. Checking deposits increased for a fourth consecutive month, to 70 from 65.0 in December and 59.5 in November. Certificates of deposit and other savings instruments advanced to 60.8 from last month’s 56.7.
A Creighton University economics professor, Ernie Goss, and Bill McQuillan, chief executive officer of City National Bank in Greeley, Neb., created the monthly survey of rural bank presidents and chief executives.
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