Labor shortage, higher borrowing among rural bankers’ concerns
Rural bankers show support for carbon pipelines
Summary
Iowa’s rural economy strengthened in February amid broader concerns that the economy is slowing, according to a survey of rural bank managers released Thursday.
Iowa’s rural economy strengthened in February amid broader concerns that the economy is slowing, according to a survey of rural bank managers released Thursday.
Creighton University’s Rural Mainstreet Index showed Iowa’s index score was 56.9 in February, up just 0.3 point from January. The index ranges from zero to 100 with a score of 50 representing neutral growth.
According to the report, Iowa’s farmland price index fell to 63.7, from 70.6 the previous month, and the new hiring index fell below growth-neutral to 48.8, down from 55.1 in January. The report also showed that Iowa accounted for 27% of the nation’s ethanol capacity, ranking first in production in the 10-state region covered by the survey.
The survey focuses on about 200 rural communities with an average population of 1,300 people.
For the overall region, the index declined more than three points to 50.1 in February.
“The Rural Mainstreet economy continues to experience slow economic growth,” said Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton. “Only 7.4% of bankers reported improving economic conditions for the month, with 85.2% indicating no change in economic conditions from January’s slow growth.”
Other highlights rom the report:
– 63% of bankers surveyed support the construction of pipelines to sequester carbon dioxide from ethanol plants as long as farmers are adequately compensated. Just over 23% said they expect that eminent domain will be used to allow carbon pipelines to cross farmland in their area.
– The farm equipment sales index remained above neutral growth in February at 52.1, behind solid agricultural financial conditions. Although down from 61.4 in January, the index has remained above growth-neutral for 25 of the last 27 months.
– The new hiring index fell to 48.1, down from 53.9 in January as labor shortages continue to constrain growth for rural businesses. Nonfarm employment in the 10-state region grew by 3.4% over the past 12 months, compared with 2.6% growth in urban areas of the same states.
– The home sales index dropped to 37, from 38.5 in January, marking the ninth straight month it has been below growth-neutral.
– The retail sales index declined to 50, down nearly two points from January. Despite it remaining growth-neutral, bankers were pessimistic about the economy for the first quarter of 2023.
The confidence index improved in February but remained below growth-neutral at 44.4 as the slowing economy, higher borrowing and labor shortages continued to constrain growth.
Michael Crumb
Michael Crumb is a senior staff writer at Business Record. He covers real estate and development and transportation.