Rural economic index expands in July
After declining below growth neutral in March, the overall Rural Mainstreet Index for July expanded above the threshold for a fourth straight month.
The results were compiled from a July survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, according to a news release.
The region’s overall reading in July slipped to 55.6 from June’s 56.9, the release said.
The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral, the release said.
“After negative growth during the first quarter of this year, the Rural Mainstreet economy experienced positive but slow economic growth for the second quarter and has now started the third quarter on a healthy note,” Ernie Goss, professor at the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business, said in the release.
The 10-state region’s farmland price index rose to 64.6 in July from 59.3 in May, representing the 34th straight month that the index has advanced above 50.0.
Bankers reported that, on average, non-farm investors secured approximately 17.1% of farmland sales in their area over the past six months. This is almost double the 9.1% reported by bankers in April 2022 when the same question was asked, the release said.
Meanwhile, the farm equipment sales index for July stood at a tepid 50.0, which was up from 48.3 in June. “Higher borrowing costs have begun to negatively impact purchases of farm equipment,” Goss said in the release.
The July loan volume index declined to a still strong 75.9 from June’s 79.2, the release said. Bank CEOs were asked to comment on the Federal Reserve’s current short-term interest rate policy, the release said, and more than nine of ten, or 92.5%, indicated that the Fed should cease raising rates. Only 7.5% indicated that the Fed should continue to raise short-term interest rates, the release said.
Higher interest rates, deposit outflows and a rising regulatory environment continued to constrain the business confidence index to a weak 44.4, up from 43.1 in June, the release said.
“Over the past 12 months, the regional confidence index has fallen to levels indicating a negative outlook,” Goss said in the release.
