Creighton University’s Rural Mainstreet Index (RMI) fell for the fifth straight month, sinking below growth neutral for a fourth consecutive month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
The region’s overall reading for September once again sank below growth neutral to 46.3, but it was up from 44.0 in August. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral. This was the fourth consecutive month the overall reading has fallen below growth neutral.
Four of 10 bankers indicate high and escalating farm input costs were the greatest economic challenge to their bank and area over the next 12 months.
“The rural mainstreet economy is now experiencing a downturn in economic activity. Supply chain disruptions and inflationary pressures from higher farm input costs continue to constrain growth. Farmers and bankers are bracing for escalating interest rates, higher farm input costs, and drought,” says Creighton’s Dr. Ernie Goss, PhD, who conducts the survey.
James Brown, CEO of Hardin County Savings Bank in Eldora, Iowa, reports, “initial farm customer reviews show good crop production and cash flow analyses.”
More than one of five, or 21.4%, of bank CEOs reported drought impacts were the greatest economic challenge going forward.
Farming and ranching: The region’s farmland price index for September climbed to 61.1 from August’s 60.0, marking the 24th straight month that the index has moved above growth neutral.
According to Jim Rothermich of the Land Talker, five farmland sales auctions between August 27 and September 2 yielded sales of greater than $20,000 per acre in Iowa counties of Ida, Dubuque and Sioux.
Farm equipment sales: After falling below growth neutral in August, the farm equipment-sales index soared to 58.0 for September from 45.9 in August. The index has risen above growth neutral for 21 of the last 22 months.
Banking: The September loan volume index climbed to a strong 79.5 from 73.9 in August. The checking-deposit index fell to 46.3 from August’s 47.9, while the index for certificates of deposit and other savings instruments decreased to 34.6 from 35.4 in August. “Higher costs of farm inputs and drought conditions in portions of the region supported stronger borrowing from farmers,” notes Goss.
Confidence: The slowing economy, strong energy prices and high agriculture input prices constrained the business confidence index to 40.7 in September, which was up from 38.0 in August. The Rural Mainstreet Index is 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.