The Creighton University Rural Mainstreet Index (RMI) plummeted in March to its lowest level since October 2016. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, this is the first reading below growth neutral after six straight months above the 50.0 threshold.
Overall: The overall index for March slumped to 35.5 from 51.6 for February. March’s decline represents the largest one month fall since the survey was initiated in January 2006.
“Approximately 61.3% of bank CEOs expect the coronavirus to produce a recession in their market area. However, almost one-third, or 32.3% expect little economic impact from the coronavirus threat,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Over the last two weeks the coronavirus has resulted in almost one-half, or 47.6%, of bankers surveyed reporting a decline in client or customer visits. Almost one-fourth, or 23.8%, indicated that their bank had experienced higher loan applications resulting from the coronavirus threat.
Another 14.3% of banks reported an increase in staff absences due to the coronavirus.
However, not all banks experienced impacts. According to Don Vogel, CEO of Farmers National Bank in Phillipsburg, Kansas “Our rural area has not been directly impacted by the virus as of yet.”
Said Marc Lamon branch president of FirsTier Bank in Kimball, Nebraska, “Our bank location is in a smaller town and less influenced by consumer traffic as we primarily finance farm operations.”
Farming and ranching: After moving above growth neutral in December, the farmland and ranchland-price index has fallen below growth neutral for three consecutive months. Even so, March’s reading dipped to 46.6 from February’s 46.8. This is the 75th time in the past 76 months the index has been below growth neutral.
The March farm equipment-sales index slipped to 37.5 from 37.9 in February. This marks the 78th month straight month that the reading has remained below growth neutral 50.0.
Banking: Borrowing by farmers expanded for March. The borrowing index rose to 66.1 from 50.0 in February. The checking-deposit index advanced to 69.4 from February’s 60.9, while the index for certificates of deposit and other savings instruments plummeted to 45.2 from 50.0 in February.
This month bankers were asked about their bank’s plan for a nationwide quarantine resulting from the coronavirus. More than half, or 54.8%, indicated that their bank had such a plan while 29.0% reported their bank was developing a plan. Only 16.2% indicated that their bank had no plan, and were not developing such a plan.
Hiring: The employment gauge fell to 48.3, its lowest reading since December 2016, and down from February’s solid 57.8.
Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, plunged to 28.3 from February’s favorable and healthy 58.1. March’s reading represented the greatest one month decline in the confidence reading since the survey was initiated in 2006.
Home and retail sales: The home-sales index slipped to a still healthy 56.5 from February’s 58.1. The retail sales index for March sank to 37.1 from 46.9 in February.
Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.
This survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (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. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.
Below are the state reports:
Colorado: Colorado’s Rural Mainstreet Index (RMI) for March fell to a regional high of 37.0 from February’s 51.0. The farmland and ranchland-price index rose to 46.7 from 46.2 in February. Colorado’s hiring index for March increased slightly to 51.6 from 50.4 in February. Between 2018 and 2019, total exports for the state fell by 2.7% with food and agricultural commodities representing 20.9% of 2019 total exports.
Illinois: The March RMI for Illinois tumbled to 32.3 from 56.6 in February. The farmland-price index decreased to 45.1 from February’s 48.1. The state’s new-hiring index slumped to 32.8 from last month’s 67.2. Between 2018 and 2019, total exports for the state sank by 8.5% with food and agricultural commodities representing 9.8% of 2019 total exports.
Iowa: The March RMI for Iowa fell to 31.0 from February’s 50.1. Iowa’s farmland-price index slipped to 44.6 from February’s 45.9. Iowa’s new-hiring index for March sank to a regional low of 28.5 from February’s 47.7. Between 2018 and 2019, total exports for the state slumped by 8.3% with food and agricultural commodities representing 32.3% of total exports for 2019.
Kansas: The Kansas RMI for March plunged to 32.0 from February’s 54.0. The state’s farmland-price index increased to 45.0 from 44.3 in February. The new-hiring index for Kansas wilted to 31.9 from 59.4 in February. Between 2018 and 2019, total exports for the state expanded by 0.2% with food and agricultural commodities representing 33.8% of total exports for 2019.
Minnesota: The March RMI for Minnesota dropped to 34.9 from February’s 58.3. Minnesota’s farmland-price index dipped to 46.0 from February’s 47.4. The new-hiring index for March fell to 50.2 from February’s 60.9. Between 2018 and 2019, total exports for the state slumped by 2.1% with food and agricultural commodities representing 9.2% of total exports for 2019.
Missouri: The March RMI for Missouri fell to 34.4 from February’s 51.5. The farmland-price index declined to 45.8 from February’s 46.3. Missouri’s new-hiring index for March slipped to 49.2 from February’s 51.7. Between 2018 and 2019, total exports for the state declined by 7.8% with food and agricultural commodities representing 13.4% of total exports for 2019.
Nebraska: The Nebraska RMI for March tumbled to 32.6 from February’s 48.3. The state’s farmland-price index slipped to 45.2 from last month’s 45.3. Nebraska’s new-hiring index plunged to 33.9 from February’s 42.3. Between 2018 and 2019, total exports for the state declined by 6.2% with food and agricultural commodities representing 52.4% of total exports for 2019.
North Dakota: The North Dakota RMI for March slumped to 34.9 from 51.7 in February. The state’s farmland-price index dipped to 46.0 from 46.4 in February. The state’s new-hiring index fell to 41.7 from February’s 52.4. Between 2018 and 2019, total exports for the state declined by 14.4% with food and agricultural commodities representing 10.5% of total exports for 2019.
South Dakota: The March Rural Mainstreet Index (RMI) for South Dakota worsened to 36.1 from February’s 57.8. The state’s farmland-price index declined to 46.3 from February’s 47.6. South Dakota’s new-hiring index contracted to 49.4 from February’s 63.5. Between 2018 and 2019, total exports for the state declined by 5.8% with food and agricultural commodities representing 35.2% of total exports for 2019.
Wyoming: The March RMI for Wyoming slumped to 35.8 from February’s 48.2. The March farmland and ranchland-price index rose to 46.3 from 44.2 in February. Wyoming’s new-hiring index rose to 44.6 from February’s 41.9. Between 2018 and 2019, total exports for the state expanded by 0.7% with food and agricultural commodities representing only 0.6% of total exports for 2019.
Tables 1 and 2 summarize the survey findings. Next month’s survey results will be released on the third Thursday of the month, April 16.
Source: Creighton University