Rural Mainstreet Index: Numbers Inch Upward

The Creighton University Rural Mainstreet Index for June increased from May’s weak reading, though it remained below growth neutral, according to the monthly survey of bank CEOs in rural areas dependent on agriculture or energy.

Overall, the index, which ranges between 0 and 100, rose to 43.9 from May’s 40.9. While still fragile, the index has increased four of the last five months.

This is the 10th straight month the overall index has remained below growth neutral. Even though agriculture and energy commodity prices have increased recently, they remain well below last year’s prices and from their peak levels in 2011. Over the past 12 months, farm prices are down by 9.5 percent, grain prices are off by 4 percent, and livestock are down by 15 percent, said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The June farm equipment-sales index expanded to 12.8 from 10.7 in May.

Rural Mainstreet businesses boosted employment levels for the month with an index of 53.2 from May’s 43.2. Goss said Rural Mainstreet employment is down by almost 1 percent from this time last year. By comparison, urban areas experienced about a 1.5 percent employment gain in the last 12-month period.

Due to the weak agriculture economy, 73.5 percent of bankers who responded to the survey say they have increased collateral requirements for farm loans. Half have boosted interest rates, and 35.3 percent have rejected a higher percentage of farm loans.

The confidence index, which reflects expectations for the economy six months out, increased to 42.8 for June compared to the May reading of 38.4. Recent improvements in agriculture commodity prices boosted the index slightly higher, Goss said.

The index collects data from about 200 rural communities in 10 states.