Rural Economy Slows In April

The Rural Mainstreet Index (RMI) decreased slightly this month, but remained well above growth neutral. The farmland price index declined in April, indicating slower growth in values, but remained above growth neutral for the 27th continuous month.

The Rural Mainstreet Index decreased to 57.1, a slight decrease from the 59.8 it posted last month.

According to Creighton University economist Ernie Goss, “We are seeing some signs across the Rural Mainstreet economy that higher energy and fuel prices are slowing growth for areas dependent on agriculture. Furthermore, somewhat slower global growth has negatively affected some portions of the rural and agriculturally dependent economy.”

Agriculture

The farmland price index decreased to 69.4 this month from 78.7 in March. This marks the 27th straight month the index has been above growth neutral. The farm equipment sales index increased to 62.4 from March’s 61.5.

Bankers were asked this month what percentage of sales were purchased by non- farmers. Bankers indicated that 20% of sales were purchased by non-farmers. DeWayne Streyle, CEO of United Community Bank of North Dakota reported, “Nonfarmer and recreation investors are driving the farm land valuations (higher).” We find this statement inconsistent with the data we have observed. In fact, we believe farmers are the primary reason farmland values have increased.

Banking

The loan volume index increased to 52.8 from 48.4 a month prior. The check deposit index increased to 72.6 from 69.4 in March and the certificate of deposit and savings instruments increased to 53.5 from a 48.4 last month.

March's hiring index decreased to 59.3 compared to 63.0 in February. “Our survey data along with government job data indicate that year-over-year job growth is now much stronger in the metropolitan and urban areas of the region than on Rural Mainstreet. Again, some of the air is coming out of the agriculture bubble, and that is not a bad thing,” said Goss. The economic confidence decreased to 60.6 from March's 63.0.

Survey

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.