Rural Mainstreet Economy Bounces Higher;
Record Expansion in Home Sales for Month
April Survey Results at a Glance:
- Rural Mainstreet Index indicates rural economy continues expansion.
- Home sales index rises to record level.
- Approximately 65 percent of bank CEOs indicate that federal spending sequestration has had no impact on their area thus far.
- Almost 29 percent of farmland sales were cash sales (not financed).
- Almost one-fifth of farmland sales over the past year were to nonfarm investors.
For Immediate Release: April 18, 2013
OMAHA, Neb. – Growth strengthened for the Rural Mainstreet economy over the past month according to the April survey of bank CEOs in a 10-state area.
Overall: The Rural Mainstreet Index (RMI), which ranges between 0 and 100 with 50.0 representing growth neutral, climbed to 58.3 from March’s solid 56.9.
Farming: The farmland price index dipped to a still strong 66.9 from March’s 67.2. This is the 41st consecutive month that the farmland-price index has been above growth neutral. The farm equipment-sales index declined to 57.3 from 60.5 in March. “Crop farmers and businesses linked to crop farming and energy continue to experience very positive economic conditions with improving balance sheets,” said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University.
However, there are some negative outcomes from the agriculture expansion. Rapidly increasing farmland prices are causing concerns for bankers. David Callies, CEO of Miner County Bank in Howard, S.D., said, “Increased agriculture land prices and rent cost are hurting our smaller operators as well as younger, beginning farmers.”
The month bank CEOs were asked about the share of farmland sold to nonfarm investors and the proportion of farmland sold for cash. Bankers indicated that almost one in five, or 19.8 percent, of sales were to nonfarm investors. This is almost identical to last April’s 21 percent. Bankers reported that approximately 28.6, only slightly less than last April’s 29 percent, of farmland sales were for cash.
“Despite very strong growth in farmland prices, bankers are indicating little change in investors’ appetite for farmland. Likewise, farmland price growth over the past year in excess of 20 percent for parts of the region did not alter the share of land purchases for cash,” said Goss.
Banking: The loan-volume index moved above growth neutral for the month. The index soared to 66.0 from 51.5 in March. The checking-deposit index declined to 63.0 from March’s much stronger 70.5 while the index for certificates of deposit and other savings instruments sank to 40.4 from last month’s 42.4 “Banking data validate the region’s healthy farm income and an expanding Rural Mainstreet economy,” said Goss.
Jim Ashworth, vice chairman of CNB Bank and Trust in Carlinville, Ill., reported very positive economic activity for both rural and urban bank locations with farmers in rural areas increasing their purchases of land and equipment.
Hiring: March’s hiring index slipped to 57.5 from March’s 59.4. “The rate of new hiring over the past several months is now back to pre-recession levels,” said Goss.
Confidence: The confidence index, which reflects expectations for the economy six months out, strengthened to 56.3 from 52.3 in March. “Despite recent pullbacks in commodity prices and questions about the global economy, Rural Mainstreet bankers are more upbeat about the economy,” said Goss.
Home and retail sales: For a third straight month the homes-sales index took a large positive jump. The April home-sales index advanced to a record 70.8 from March’s 69.2. The April retail-sales index slipped slightly to 51.4 from 51.6 in March.
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