Rural Mainstreet Index Soars To Highest Level In Four Years
The April overall index for the Rural Mainstreet economy moved above growth neutral 50.0 for a sixth straight month indicating that the rural, agriculturally-dependent areas of the region continue to expand at a very healthy pace, according to this month’s survey of bank CEOs in a 10-state region in the Rural Mainstreet Index (RMI).
Overall the RMI, which ranges between 0 and 100, advanced to a strong 59.4 from March’s 56.7. This compares to a much weaker reading of 44.2 in April 2010.Creighton University economist & co-creator of the survey Ernie Goss said, “Higher oil prices have yet to derail or even slow the pace of growth for the Rural Mainstreet economy.”
|
The Mainstreet Economy (index > 50 indicates expansion) |
|||
|
|
Apr-10 |
Mar-11 |
Apr-11 |
|---|---|---|---|
|
Area economic index |
44.2 |
56.7 |
59.4 |
|
Loan volume |
61.1 |
47.1 |
58.1 |
|
Checking deposits |
62.7 |
68.7 |
65.5 |
|
Certificates of deposit |
52.5 |
45.5 |
48.5 |
|
Farmland prices |
59.5 |
75.0 |
77.6 |
|
Farm equipment area sales |
57.2 |
75.9 |
74.2 |
|
Home sales |
52.5 |
52.3 |
55.2 |
|
Hiring in the area |
46.7 |
56.0 |
56.9 |
|
Retail business |
43.4 |
53.0 |
50.1 |
|
Confidence index (area economy six months out) |
60.2 |
65.2 |
61.0 |
Bank CEOs were asked what they considered to be the greatest threat to the Rural Mainstreet economy. Approximately 48% indicated that a significant downturn in farm commodity prices was the single biggest threat to the rural economy while 39% reported that high energy prices was the most significant threat to rural economy. The remaining 13% named changing federal policies regarding alternative energy production and other federal regulatory changes as the number one threat to the Rural Mainstreet Economy. Just four months ago when asked the same question, 28% said a downturn in agriculture commodity prices was their chief concern.
Pete Haddeland, CEO of the First National Bank in Mahnomen in Mahnomen, MN indicated that the U.S. must get the hedge funds out of trading oil futures in order to restore energy prices to more reasonable levels.
The farmland price index remained above growth neutral for the 15th straight month, advancing to a lofty 77.6. One year ago, the farmland index stood at 59.6. The farm equipment sales index dipped to a still robust 74.2 from March’s 75.9.
“Firms linked to agriculture or energy are experiencing very healthy growth and growth prospect. On the other hand, Rural Mainstreet companies that are not tied to the farm economy continue to experience very little growth,” said Goss.
This month bankers were also asked how much they expected crop expenses to increase from last year at this time. CEOs expect crop-planting expenses to be approximately 13% higher in 2011 than 2010. Approximately one in six said they anticipate planting expenses to increase by more than 20% from 2010.
For a fifth straight month the Rural Mainstreet economy added jobs with an April index of 56.9, up from 56.2 in March. “Rural areas are outpacing the urban areas in terms of job growth. However the gap between urban and non-urban is closing,” said Goss. ◆