Farmland Price Index Jumps 17%
Nov 20, 2012
The Rural Mainstreet Index (RMI) increased for the third consecutive month indicating the rural economy is showing signs of improvement. The farmland price index posted its highest one month increase since the initiation of the survey in 2005.
The RMI increased ever so slightly to a 57.5 from a 56.6 in October. According to Creighton University economist Ernie Goss, “Our survey indicates that the Rural Mainstreet businesses are shedding the negative impacts of the 2012 drought. However, given the continuing lack of moisture across much of the region, this economic respite may be short-lived.”
The farmland price index jumped 12.2 points, posting an 83.9 this month, the largest one month increase since the survey started. This marks the 34th consecutive month the index has been above growth neutral. The farm equipment sales index decreased slightly to 60.4 vs. 60.5 last month.
Bankers were asked what the biggest challenge for ethanol producers would be in the coming year. An overwhelmingly 67.7 percent indicated high corn prices as the number one challenge.
The loan volume index increased to 47.8 from a 44.2 in October. The check deposit index increased to 75.1 from 66.7 last month and the certificate of deposit and savings instruments increased to 45.5 from 42.0 in October. “Despite the 2012 drought, farming and non-farming businesses have remained financially healthy with solid cash balances,” explained Goss.
October's hiring index increased slightly to 53.0 compared to 51.5 last month. The economic confidence index, which reflects expectations of the economy in the next six months, decreased to below growth neutral, 45.6. Ernie Goss said, “The uncertainty surrounding the national economy including the 'fiscal cliff,' the farm bill, and energy policy are negatively affecting the economic outlook of bankers.”
This survey represents an early snapshot of the economy of rural, agriculturally and energy-dependent portions of the nation. The RMI is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy.
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