The Creighton University Rural Mainstreet Index (RMI) climbed in March from February's healthy reading and remained above growth neutral for the 16th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The region's overall reading for March jumped to 65.4, from February's 61.5. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
"A 25% gain in farm commodity prices over the past 12 months, near-record-low short-term interest rates and growing agricultural exports have underpinned the Rural Mainstreet Economy," said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
Farming and ranching: The region's farmland price index decreased to a still strong 78.0 from February's 78.8. March's reading represented the 18th straight month that the index has moved above growth neutral.
Even with the rapidly rising farm input costs, 42.3% of bank CEOs expect 2022 net farm income to expand from 2021's healthy level. Only 11.5% of bankers anticipate a decline in 2022 net farm income from 2021's value. The remaining 46.2% of bankers expect no change in 2022 net farm income from 2021 levels.
Approximately 38.4% of bankers expect Russia's invasion of Ukraine to have negative impacts on net farm income. Of bankers projecting negative impacts, damages are expected to be higher for livestock producers than for grain producers.
Farm equipment sales: The March farm equipment-sales index increased slightly to 72.2 from 72.0 in February. This was the 16th straight month that the index has advanced above growth neutral. Readings over the past several months are the strongest string of monthly readings recorded since Spring 2011.
Banking: The March loan volume index advanced to 61.9 from February's 40.4. The checking-deposit index declined to 78.8 from February's 80.8, while the index for certificates of deposit and other savings instruments increased to 40.4 from 34.6 in February.
Despite surging farm input costs and global tensions, over 96% of bankers indicated that they had not tightened credit standards for farmers. Furthermore, 42.3% of bankers expect net farm income to expand for 2022. Only 11.5% of bankers anticipate a decline in net farm income with the remaining 46.2% forecasting no change in 2022 net farm income from 2021 levels.
Hiring: The new hiring index expanded to 63.5 from 61.5 in February. Labor shortages continue to be a significant issue constraining growth for Rural Mainstreet businesses.
Even with significant labor constraints, U.S. Bureau of Labor Statistics data indicate that over the last 12 months, the Rural Mainstreet region has experienced a solid 3.2% gain in nonfarm employment (non-seasonally adjusted) compared to a higher 3.7% expansion for urban areas in the 10-state region.
Confidence: Despite Russia's invasion of Ukraine and accompanying global trade tensions, bankers' business confidence, which reflects bank CEO expectations for the economy six months out, advanced to a solid 54.0 for March, up from 51.9 in February.
Home and retail sales: The home-sales index climbed to a very strong 69.2 from February's 63.5. The retail-sales index for March sank to 51.9 from February's solid 57.7. "Healthy farm commodity prices and federal stimulus spending continue to have positive impacts on Rural Mainstreet retail sales and home sales," said Goss.
The survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It provides the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005 and launched it in January 2006.
The March RMI for Minnesota plummeted to 59.6 from 89.0 in February. Minnesota's farmland-price index declined to 77.4 from February's 88.1. The new-hiring index for March declined to 62.5 from 73.0 in February. U.S. Bureau of Labor Statistics data indicate that over the last 12 months, Minnesota's Rural Mainstreet has experienced a solid 2.3% gain in nonfarm employment (non-seasonally adjusted) compared to a higher 2.8% expansion for urban areas of the state.
Categories: Minnesota, Business, North Dakota, Business