Rural Mainstreet Economy: Weakness Continues

While the Creighton University Rural Mainstreet Index rose for March, it remains weak, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The Rural Mainstreet Index (RMI), which ranges between 0 and 100, increased to 40.2 from February’s 37.0 and January’s 34.8.

“This is the seventh straight month the overall index has moved below growth neutral. Recent declines are the result of lower agriculture and energy commodity prices and downturns in manufacturing. Since June of last year, prices for farm products have fallen by approximately 11 percent, and fuel by roughly 25 percent,” said Ernie Goss, economics professor at Creighton University and the keynote speaker at the recent 2016 Spring Conference in Clearwater, Fla.

The March farm equipment-sales index sank to a record low of 6.7 from February’s 11.3.

“Weakness in farm income continues to (limit) the sale of agriculture equipment across the region,” Goss said. “Reductions in farm prices have negatively affected the agriculture equipment dealers and manufacturers in the region.”

Contrary to other economic indicators, Rural Mainstreet businesses increased hiring for the month with a March hiring gauge of 60.3, up from 48.9 in February. The confidence index, which reflects expectations for the economy six months out, moved slightly lower to 30.1 from 30.4 in February, indicating a pessimistic outlook among bankers.

Home sales remain the bright spot of the Rural Mainstreet economy with a March index of 55.8, which was an increase from 51.1 in February. S