Although prices for farmland continue to decline, the land price index rose to 46.3 from 42.2.
The rural economy showed strength in a survey of bankers in 10 Midwestern states this month, pushing the Rural Mainstreet Index to its highest point since May 2014.
Creighton University economist Ernie Goss said he was surprised by the reading, 54.8 on a scale from zero to 100, with numbers above 50 showing economic growth. The January index was 46.8, the sixth straight month of decline.
Goss said weak agricultural commodity prices continue to hold back rural incomes. Fewer than one-fourth of the 168 bankers surveyed reported economic growth in the non-urban areas of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
Four out of 10 of the bankers said they have raised collateral requirements for farm loans, a sign of financial worries. Nevertheless, the bankers’ outlook for the coming six months also improved, raising the survey’s confidence index to 52.4 from 46.7 in January.
Goss said potential changes in the North American Free Trade Agreement, which supports strong U.S. farm exports, could undermine that optimism.
Although prices for farmland continue to decline, the land price index rose to 46.3 from 42.2. It was the highest index since July 2014 but the 51st straight month of decline.
Farm equipment sales registered the 54th straight month of decline, and most of the bankers said they expect slower equipment sales in 2018, by an average of about 7 percent.
Hiring in the rural areas was strong, with an index of 58.8, although job growth has been slower than in urban areas, Goss said. The index for home sales moved higher, while the retail sales index improved but remained in the decline zone.
Nebraska’s index was 54.3, up from January’s 46.3, with a farm land price index of 46.1, up from 42.1 in January. The state’s hiring index was 57.9, down from 60.6.
Iowa’s index was 55.3, up from 47.3 in January, with a farmland price index of 46.4, up from 42.4 in January. The hiring index was 60, up from 52.1.