Banking Index Improves in November

Posted on 11/19/2020 12:58 PM

For the first time since April of this year, the Creighton University Rural Mainstreet Index (RMI) declined. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index fell to its lowest level since August of this year.         

The overall index for November sank below growth neutral to 46.8 from October’s 53.2. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Recent improvements in agriculture commodity prices, federal farm support payments, and Federal Reserve’s record low interest rates have underpinned the rural main street economy. Still, only 6.5% of bankers reported economic improvements from October, while 12.9% detailed economic pullbacks for the month,” says Creighton University’s Ernie Goss, who conducts the monthly survey.

Farming and ranching index improves: For a second straight month, the farmland-price index advanced above growth neutral. The November reading jumped to 55.0 from October’s 50.6. This is first time since 2013 that Creighton’s survey has recorded back-to-back above growth neutral readings in farmland prices.

The November farm equipment-sales index increased to 42.9, its highest level since December 2013, and up from 37.9 in October. However, this marks the 86th straight month the reading has remained below growth neutral 50.0.  

This month bankers were asked to project the share of grain farmers likely to experience negative cash flow for 2021. Bankers expect 9.2% of grain farmers’ cash expenses to exceed cash revenue. This is an improvement from 2019 when bankers projected 12.4% of farmers to experience negative cash flows for 2020.

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area 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, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.   


 

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