Rural Mainstreet Economy Slows in September
For the first time since March of this year, the overall Rural Mainstreet Index (RMI) sank below growth neutral for September, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The region’s overall reading for September fell to 49.5 from August’s 50.0. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
September 2023 Survey Results at a Glance:
- For the first time since March of this year, the overall Rural Mainstreet Index sank below growth neutral.
- Approximately half of bankers expect economic conditions to worsen in the next six months.
- A downturn in farm income was registered by bank CEOs as the No. 1 challenge to banking profitability for the next 12 months.
- For the fifth time in the past 12 months, farming equipment sales declined.
- Bank CEOs expect rising interest rates to represent the second greatest challenge to banking operations over the next 12 months.
- The region’s agriculture exports, including processed foods, fell from $19.95 billion in the first seven months of 2022 to $18.45 billion for the same period in 2023, for a 7.4% slump.
Farming and ranching land prices: The region’s farmland price index climbed to 65.4 from 60.0 in August. This was the 36th straight month that the index has advanced above 50.0
Farm equipment sales: The farm equipment-sales index for September slumped to 44.0 from August’s 46.0. “This is the fifth time in the past 12 months that the index has fallen below growth neutral. Higher borrowing costs are having a negative impact on the purchases of farm equipment,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Hiring: The new hiring index for September dropped to 49.2 from August’s 51.9. Over the past 12 months, the Rural Mainstreet Economy has expanded jobs by 1.9% compared to a lower 1.3% for urban areas of the same 10 states.
Confidence: Higher interest rates, deposit outflows and a rising regulatory environment continued to constrain the business confidence index to a much weaker 26.8 from 38.9 in August. “This month’s reading is the most negative outlook recorded since July 2022. Over the past 12 months, the regional confidence index has fallen to levels indicating a very negative outlook,” said Goss.
The region’s agriculture exports, including processed foods, fell from $19.95 billion in the first seven months of 2022 to $18.45 billion for the same period in 2023, for a 7.4% slump.