April Survey Results at a Glance:
*High grain prices and ethanol production propel rural economy higher
*Land price index soars to record high
*Hiring remains strong, but labor shortages surface in some areas
*88 percent of bankers report little fallout from housing downturn and sub-prime lending problems
The Mainstreet economic index from the April survey of bank chief executive officers (CEOs) in non-urban, agriculturally dependent portions of a nine-state area declined slightly from March’s record level. Despite the decline, the index continues to indicate significant growth with labor shortages in some areas. Agricultural land prices soared to a record level in April. Each month, community bank presidents and CEOs are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.
Bank presidents and CEOs in the region reported record business activity for April as the overall economic index declined slightly to 66.9 from March’s 68.1, but it was up significantly from last April’s reading of 48.0. A reading of 50.0 is growth neutral, thus April’s index indicates brisk growth.
While the negative fallout from the housing decline and sub-prime loan defaults have slowed growth in the nation, bankers on Mainstreet report little impact from home and mortgage troubles with only 8.0 percent of the bankers indicating any substantial negative impact. Importantly, the home-sales index for the region advanced above growth neutral for the first time since the survey was started in late 2005 with an April reading of 50.8, up from March’s 42.4.
Ethanol production and high farm income continue to drive the Mainstreet economy into very healthy territory. The monthly hiring index indicates significant job growth even though it moved down to 65.3, from March’s 66.0. “Bankers are increasingly reporting labor shortages, especially those located close to ethanol plants. Despite these shortages, job growth in the region is currently over twice the historical average for the nine states.
Stay tuned for trade developments and their impact on Mainstreet.