Since falling to a record low in April of this year, the Creighton University Rural Mainstreet Index (RMI) has increased for six straight months. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index rose to its highest level since January, prior to the onset of COVID-19.
Overall: The overall index for October climbed above growth neutral 50.0 to 53.2 from September’s 46.9. 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, and the Federal Reserve’s record low interest rates have underpinned the rural main street economy. Still, more than one-third, or 35.5%, of bank CEOs reported their local economies were experiencing recessionary economic conditions,” says Creighton University’s Dr. Ernie Goss, who conducts the survey.
Farming and ranching: For only the third time in the past 82 months, the farmland price index advanced above growth neutral for October. The October reading jumped to 50.6 from September’s 45.0.
The October farm equipment-sales index increased to 37.9 from 32.1 in September. This marks the 85th straight month the reading has remained below growth neutral 50.0.
Bank CEOs estimate that farm equipment sales will fall by an additional 3.1% over the next 12 months.
Banking: For the first time since January of this year, banks reduced the volume of loans. The borrowing index slumped to 46.8 from September’s 60.9. The checking-deposit index declined to 66.1 from 76.6 in September, while the index for certificates of deposit, and other savings instruments increased to 38.7 from 35.9 in September.
Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, improved to 51.6 from September’s 50.0. “COVID-19 related farm support payments and improving grain prices have boosted confidence offsetting pessimism from the impact of the pandemic,” states Goss.
This month, bankers were asked to identify the industry in their area most harmed by the pandemic. More than eight of 10, or 80.6%, named restaurants/bars as experiencing the greatest negative impacts from COVID-19. Others areas identified by bankers as economically impacted were: 3% identified farmers, 3.4% said medical care, 6.3% identified retailers, and 6.7% said hourly workers.
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.