According to the October survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the overall Rural Mainstreet Index (RMI) sank below growth neutral for the fifth time in the past six months.
Readings range between 0 and 100 with 50.0 representing growth neutral.
Overall: The region’s overall reading for October fell to 42.5, the lowest reading since July of this year and down from 44.7 in September. “Supply chain disruptions stemming from the Iran conflict have produced record high prices for diesel fuel and fertilizer, pushing the overall index lower. Almost half of bank CEOs expressed backing for federal farm support programs, such as the recent $8 billion program announced by President Trump,” says Creighton University’s Dr. Ernie Goss, who conducts the survey.
Farming and ranchland prices: For the fifth time in the past six months, the farm and ranchland price index climbed slightly above growth neutral. The farm and ranchland index increased to 50.3 versus 50.1 in September. “Farm and ranchland values have been holding up much better than farm and ranching income, due to a more positive long-term economic outlook for U.S. agriculture,” observes Goss.
Bankers were asked to name the top non-farmer, non-rancher investor in local farmland. Overwhelmingly, 65% of bankers named local investors, composed of 25% retired farmers/ranchers and 40% other local business investors.
Farm equipment sales: The October farm equipment sales index increased but is still a weak 36.8 compared to September’s 25.0. “This is the 38th straight month the equipment sales index has fallen below growth neutral. Approximately 28% of bankers named local agriculture equipment dealers as bearing the greatest financial stress from weakness in the farm/ranch economy,” notes Goss.
Hiring: The new hiring index for October rose to 52.5 from September’s 49.5. The rural ,ainstreet job market has remained weak for the last several months. “
“In October, 15% of bankers reported an upturn in hiring by rural mainstreet businesses. This compared to 10% of bankers reporting a downturn in hiring by rural mainstreet businesses,” says Goss.
Confidence: Rural bankers remain pessimistic about economic growth for their area for the next six months. The October economic confidence index increased to a weak 27.5 from 26.3 in September. “Soaring diesel fuel costs, continuing supply chain disruptions, and higher fertilizer costs continue to weigh on banker economic confidence,” states Goss.
The survey represents an early snapshot of the economy of rural agricultural- and energy-dependent portions of the nation. The Rural Mainstreet Index covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy.