The Creighton University Rural Mainstreet Index (RMI) climbed in March from February's healthy reading and remained above growth neutral for the 16th straight month, according to the monthly survey of bank CEOs in rural areas of an average population of 1,300 across Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming—all dependent on agriculture and/or energy.
Overall: The region's overall reading for March jumped to 65.4, from February's 61.5. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
"A 25% gain in farm commodity prices over the past 12 months, near-record-low short-term interest rates and growing agricultural exports have underpinned the Rural Mainstreet Economy," said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
Farming and ranching: The region's farmland price index decreased to a still strong 78.0 from February's 78.8. March's reading represented the 18th straight month that the index has moved above growth neutral.
Even with the rapidly rising farm input costs, 42.3% of bank CEOs expect 2022 net farm income to expand from 2021's healthy level. Only 11.5% of bankers anticipate a decline in 2022 net farm income from 2021's value. The remaining 46.2% of bankers expect no change in 2022 net farm income from 2021 levels. Approximately 38.4% of bankers expect Russia's invasion of Ukraine to have negative impacts on net farm income, especially for livestock producers than for grain producers.
Farm equipment sales: The March farm equipment-sales index increased slightly to 72.2 from 72.0 in February. This was the 16th straight month that the index has advanced above growth neutral. Readings over the past several months are the strongest string of monthly readings recorded since Spring 2011.
Banking: The March loan volume index advanced to 61.9 from February's 40.4. The checking-deposit index declined to 78.8 from February's 80.8, while the index for certificates of deposit and other savings instruments increased to 40.4 from 34.6 in February.
Despite surging farm input costs and global tensions, over 96% of bankers indicated that they had not tightened credit standards for farmers. Furthermore, 42.3% of bankers expect net farm income to expand for 2022. Only 11.5% of bankers anticipate a decline in net farm income with the remaining 46.2% forecasting no change in 2022 net farm income from 2021 levels.
Hiring: Even with significant labor constraints, U.S. Bureau of Labor Statistics data indicate that over the last 12 months, the Rural Mainstreet region has experienced a solid 3.2% gain in nonfarm employment (non-seasonally adjusted) compared to a higher 3.7% expansion for urban areas in the 10-state region.
Confidence: Despite Russia's invasion of Ukraine and accompanying global trade tensions, bankers' business confidence, which reflects bank CEO expectations for the economy six months out, advanced to a solid 54.0 for March, up from 51.9 in February.