August Survey Results at a Glance:
* For a seventh straight month the overall index rose above growth neutral.
* Bankers reported a decline in the sale of agriculture equipment and expect sales to decline by another 7.8 percent over the next 12 months.
* More than one-half of bankers supported cutting recently enacted tariffs.
* In reaction to weak farm commodity prices and income, almost one-third of bank CEOs reported rejecting a higher percentage of farm loans.
This week Creighton University released the August Rural Mainstreet Index and it showed growth in August for a seventh straight month. Each month, community bank presidents and CEOs in nonurban agriculturally 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. The survey represents an early snapshot of the economy in rural communities dependent on agricultural.
The overall index climbed to 54.8 from 53.8 in July. The index ranges between 0 and 100 with 50.0 representing growth neutral.
The farmland and ranchland-price index for August was unchanged from July’s 44.7. This is the 57th straight month the index has fallen below growth neutral 50.0.
In reaction to weak farm commodity prices and income, almost one-third, or 31.0 percent, of bank CEOs reported rejecting a higher percentage of farm loans. More than half, or 54.8 percent, indicated raising collateral requirements, while 4.8 percent reported reducing the size of farm loans.
The August farm equipment-sales index fell to 37.8 from July’s 38.8. This marks the 60th consecutive month the reading has moved below growth neutral 50.0.
In terms of the sale of farm equipment over the next 12 months, bankers expect sales to decline by 7.8 percent.
Borrowing by farmers expanded for August, but at a slower pace than in July, as the loan-volume index declined to 72.2 from 76.9 in July. The checking-deposit index slumped to 36.0 from July’s 37.8, while the index for certificates of deposit and other savings instruments increased to 48.8 from 43.9 in July.
The employment gauge improved to a very strong 68.7 from July’s 65.6. The Rural Mainstreet economy is now experiencing positive job growth. Over the past 12 months, the Rural Mainstreet economy added jobs at a 1.1 percent pace.
The confidence index, which reflects expectations for the economy six months out, rose to a weak 46.5 from July’s 42.7, indicating a pessimistic economic outlook continues among bankers.
Bankers were asked their position on recently implemented and proposed tariffs on imported goods. More than half, or 51.1 percent, support cutting or eliminating those tariffs. Approximately 41.9 percent support continuing current tariffs and trade policy while 7.0 percent endorse pursuing a more hawkish approach by raising tariffs.
Regional state reports include:
Iowa: The August RMI for Iowa climbed to 56.8 from 56.0 in July. Iowa’s farmland-price index for August rose to 44.1 from July’s 42.1. Iowa’s new-hiring index for August jumped to 59.1 from July’s 50.1. Iowa’s 2017 export of agriculture commodities was $1.5 billion.
Minnesota: The August RMI for Minnesota dipped to 53.1 from July’s 54.8. Minnesota’s farmland-price index rose to 44.0 from 42.1 in July. The new-hiring index jumped to 59.0 from July’s 50.4. Pete Haddeland, CEO of the First National Bank in Mahnomen, said, “Crops look good; prices not so good.” Minnesota’s 2017 export of agriculture commodities was $621.4 million.
Nebraska: The Nebraska RMI for August sank to 55.2 from 56.3 in July. The state’s farmland-price index increased to 44.9 from last month’s 43.7. Nebraska’s new-hiring index rose to 67.4 from 56.5 in July. Nebraska’s 2017 export of agriculture commodities was $918.6 million.
South Dakota: The August RMI for South Dakota remained above growth neutral but fell to 55.4 from July’s 56.3. The state’s farmland-price index increased to 44.9 from July’s 42.7. South Dakota’s new-hiring index climbed to 67.8 from 56.5 in July. South Dakota’s 2017 export of agriculture commodities was $40.4 million.