Rural Mainstreet: Equipment Index Continues to Climb

The Creighton University Rural Mainstreet Index released last week climbed above growth neutral in July for a sixth straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The July farm equipment-sales index increased to 38.8 from June’s 36.3. The index has not risen to growth neutral since August 2013.

The overall index slid to 53.8 from 56.1 in June. This is the sixth consecutive month the index has been above growth neutral, and that is the longest run in that position since July 2014.

The index ranges between 0 and 100 with 50.0 representing neutral growth.

“Surveys over the past several months indicate the Rural Mainstreet economy is solid but with less positive economic growth,” said Ernie Goss, Ph.D., chair of regional economics for Creighton University’s business school.

Goss said “the negative impacts of recent trade skirmishes have begun to surface with the weakening of already anemic grain prices.”

Many bankers reported good, or above average rainfall, with crop production off to a good start. Furthermore, in portions of the region, the recreation industry was boosting the economy.

Borrowing by farmers expanded for July as the loan-volume index rose slightly to 76.9 from 76.3 in June.

The confidence index, which reflects expectations for the economy six months out, sank to 42.7 from June’s 48.8, indicating plummeting economic optimism among bankers.

More than three of five bankers who responded to the survey, or 78 percent, reported that current trade skirmishes and rising tariffs have had a negative impact on their local economy.

Almost one-third of bank CEOs recommended that the Federal Reserve leave short-term interest rates at their current levels for the rest of the year.