Rural Mainstreet Still Struggles, Some Numbers Improve

The Rural Mainstreet Index advanced slightly for January, indicating tepid growth in the regional economy.

The Creighton University Rural Mainstreet Index rose slightly from December’s weak reading, according to the monthly survey of bank CEOs in a 10-state region.

The January index was 50.9, up from December’s 50.0 and tilting toward positive growth on the zero-to-100 scale.

“Lower energy and grain prices, along with weaker exports, continue to restrain growth in the rural economy,” said Ernie Goss, Ph.D., Jack A. MacAllister Chair in Regional Economics at Creighton.

Goss will deliver the keynote address at the Association's Spring Conference in April in Clearwater, Fla.

The survey also revealed that lower gas prices are positively affecting rural communities.

Among other findings:

The January farm-equipment sales index expanded to 29.5 from 23.7 in December. The index has been below growth neutral, which is 50, for 18 straight months. Goss said that “farmers have become very cautious regarding equipment purchases, even though they have not changed their spending on seed and chemicals.”

On the other hand, Jim Ashworth, president of Carlinville National Bank in Carlinville, Ill., said in the survey: “As usual, following a successful growing season, many grain producers have made year-end equipment purchases as a tax management strategy.”

The farmland and ranchland-price index for January advanced to a weak 39.4 from December’s 38.6. “Much weaker crop prices continue to take air out of the bubble in agricultural land prices," Goss said.

On average, bank CEOs expect 2015 cash rents for farmland to decline to $214 per acre, down significantly from last year’s $254.

Despite weaker crop prices and pullbacks from businesses with close ties to agriculture and energy, rural businesses continue to add workers to their payrolls. The January hiring index slipped to 52.8 from December’s 55.2. Goss said businesses continue to add jobs at a positive pace even with the weaker agriculture conditions and lower energy prices. Year-over-year job growth for the region is now approximately 1.4%, which is down from 1.8% recorded last month but still well above the historic average.

The confidence index, which reflects economic expectations six months out, advanced to 43.6 from 42.5 in December.

Each month, community bank presidents and CEOs in nonurban, agriculture- and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included. S