CREIGHTON UNIVERSITY RURAL MAINSTREET INDEX REMAINS BELOW GROWTH THRESHOLD
Aug. 15, 2016
Source: Creighton University
The Creighton University Rural Mainstreet Index for July fell from June's weak reading, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture or energy.
After improving for four of the last five months, the index, which ranges between 0 and 100, sank to 39.8 from 43.9 in June.
The survey showed that over the past 12 months, farm prices have fallen by 9 percent, and livestock prices are off by 16 percent. These weak agriculture commodity prices are pushing the overall Rural Mainstreet economy lower, said Ernie Goss, professor and chair in regional economics at Creighton University.
As a result of weaker farm economic conditions, bankers expect almost one in five crop farmers, or 19.5 percent, to suffer negative cash flows this year. Bank CEOs also expect farm loan defaults to grow by 5.4 percent over the next year, according to the survey.
The farm equipment-sales index for July sank to 10.7 from 12.8 in June. The confidence index, which reflects expectations for the economy six months out, fell to 32.3 from its June reading of 42.8.
Employment in rural communities is down by 1.8 compared to last year. Urban employment in the same states is up by 1.4 percent.
Borrowing by farmers remains strong even though the July loan-volume index dipped to 67.4 from last month's 73.5. The checking-deposit index increased to 49.0 from June's 47.9, while the index for certificates of deposit and other savings instruments improved slightly.