The Rural Mainstreet Index for March soared to a record high 71.9, up from February’s solid 53.8, the fifth time in the last half year it’s been above growth neutral.
Two-thirds of bank CEOs responding to the survey said their local economies were growing, and farmland and equipment prices also showed positive signs. The confidence index, which reflects bank CEO expectations for the economy six months out, rose to a very healthy 76.7, up from 64.0 last month.
For a sixth straight month, the farmland price index advanced above growth neutral, the first six-month stretch of positive growth since 2013. The March reading climbed to 71.9, its highest level since November 2012, and up from 60.0 in February.
Bankers reported that approximately 12.3 percent of farmland sales were cash sales, down from 17.3 percent in February 2020.
The March farm equipment-sales index rose to 63.5, its highest reading since February 2013, and up from 62.7 in February. After 86 straight months of readings below growth neutral, farm equipment bounced into growth territory for the last four months.
For the first time since September of last year, bankers reported an expansion in loan volumes. The March loan volume index increased to 60.9 from February’s 46.1. The checking-deposit index sank from February’s record high 88.5 to 84.4, while the index for certificates of deposit, and other savings instruments, increased to 46.9 from 46.2 in February.
This month, 82.8 percent of bankers said they support at least one interest rate hike in the next 12 months.
“Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the Rural Mainstreet Economy. Only 3.1 percent of bank CEOs indicated economic conditions worsened from the previous month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “Even so, current rural economic activity remains below pre-pandemic levels.”
The new hiring index rocketed to 72.9 from 51.9 in February. Despite recent solid job gains for the region, data from the U.S. Bureau of Labor Statistics indicate that nonfarm employment levels for the Rural Mainstreet economy are down by 218,600 (nonseasonally adjusted), or 5 percent, compared to pre-COVID-19 levels.
The RMI surveys community bank presidents and CEOs each month in nonurban agriculturally and energy-dependent areas regarding current and projected economic conditions in their communities. Bankers come from about 200 small towns with an average population of 1,300 in 10 states: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
Goss and Bill McQuillan, former chair of the Independent Community Banks of America, created the monthly economic survey in 2005.