Published on: 11:56AM Nov 24, 2009
The overall Rural Mainstreet Index (RMI) climbed to a 14-month high according to Creighton University’s November survey of bank CEOs in an 11-state region. The RMI rose to 38.4, which is the highest since September 2008, but still significantly below growth neutral 50. Farm equipment sales, hiring, and retail sales all increased to 12-month highs during November.
The farmland price index of 45.6 continued its steady increase from last month’s 43.0 and September’s 41.1. The index has been below growth neutral for 13 consecutive months, but well above its record low in March 2009 of 33.1.
The farm equipment area sales index increased to 39.9 this month from 36.7 in October. Hiring increased as well, from October’s 35.6 to 36.3 this month. The retail business index rose to 38.5 from 36.0 in October. The retail business index is at its highest since April of 2008. Sales have picked up across rural mainstreet, but these indexes still indicate a weak economy.
The confidence index, which gives an outlook on the economy six months from now, decreased to 50.1 from last month’s 58.7, still representing positive growth. The index is still much higher than its record low from November 2008 of 13.0.
Credit has tightened on rural mainstreet. The loan to volume index decreased to a record low 38.3 from October’s 42.4. Bankers are getting mixed messages from the federal government regarding lending. The Treasury Department is encouraging increased lending while bank regulatory oversight is negatively affecting lending by the banks, according to the survey from last week.
As indexes increased this month, many remained below growth neutral. Over the past year, five of the nine indexes that make up the RMI have been below growth neutral.
Bankers are forecasting a recovery. The overall RMI is at a 14-month high of 38.4 and the confidence index remained in positive growth.
Farmland values have stabilized according to recent Federal Reserve Bank reports, and the RMI farmland price index. Farmland values decreased across much of the US during the fourth quarter of 2008, but have since stabilized in 2009 due to stronger economic conditions and recovering commodity prices. This has been observed by the RMI farmland price index increasing from its March 2009 low 33.1 to its November 45.6.
Read more about agriculture and farmland at farmlandforecast.colvin-co.com.