Farm Equipment Sales Index Improves to Highest Number in 28 Months
The Rural Mainstreet Index in May rose to its highest level since July 2015. And, the farm equipment-sales index jumped to its highest level in more than two years.
After dropping below growth neutral for 20 straight months, the mainstreet index, which is produced by Creighton University, moved slightly above the 50 threshold to 50.1. It was 44.6 in April.
“Stabilizing and slightly improving farm commodity prices helped push the overall index into a weak but above growth neutral position for May,” said Ernie Goss, chair in Regional Economics at Creighton’s Heider College of Business.
The May farm equipment-sales index increased to 26.8 from 21.5. This marks the 45th consecutive month the reading has fallen below growth neutral, but it is the highest reading since January 2015.
More than one in 10 bankers reported that farm foreclosures represent the greatest risk to banking operations for the next five years, which is more than double the 4.5 percent of bankers who identified such foreclosures as the greatest risk in the May 2016 survey.
In terms of risk to the rural economy, 86.7 percent of bankers think low agriculture commodity prices are the greatest threat to the rural economy. This is down from the 90.9 percent who detailed the same risk in May 2016.
The confidence index, which reflects expectations for the economy six months out, expanded to 46.6 from 45.6.
Each month, bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding economic conditions and outlooks in their communities.
Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming participate.
Every state except Missouri saw an increase in its overall index in May. North Dakota saw more than a 20-point increase in its index but was below growth neutral at 45.7. The indices for Wyoming and Iowa increased by more than 10 points each to 47.5 and 49.4, respectively.