Bank CEO sentiments fell to their lowest reading this month in nearly four years, according to Creighton University’s monthly survey of CEOs in rural areas of a 10-state region.
The Rural Mainstreet Index fell to 38 from 46.2 in February, its seventh straight month of below growth-neutral 50 and lowest reading since June 2020. Three-fourths of bank CEOs said their local economy is already in a recession this month, or will likely enter a downturn by the end of June.
Rural bankers remained pessimistic over economic growth expectations, with the confidence index falling to 36 from 40.4 in February. “Higher interest rates, weaker agriculture commodity prices and higher grain storage costs pushed the overall reading to its lowest level since the early months of the pandemic,” said Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton’s Heider College of Business.
Farmland prices increased for the 52nd straight month. The regional index for farm equipment sales fell below 50 for the ninth time in the past 10 months. The index, which fell to 30.4, has reached its lowest mark since May 2020. Nearly one-in-three bankers said their bank had tightened credit standards on farm loans.
“This is the ninth time in the past 10 months that the index has fallen below growth-neutral,” Goss noted. “Higher borrowing costs, tighter credit conditions and weaker grain prices are having a negative impact on the purchases of farm equipment.”
Other report findings included:
- The new hiring index increased to 52.2 from 49 in February, with the vast majority of bankers seeing no change in hiring this month. According to the U.S. Bureau of Labor Statistics, regional rural employment increased 1.7 percent, compared to 0.7 percent for urban areas.
- This month’s loan volume index rose to 79.2 from 66 in February, and the checking deposit index increased to 62.5 from 48. The index for certificates of deposits and other savings instruments increased to 72.9 from 60 in February.
- The index for home sales and retail sales fell below 50 for the fifth straight month, with the home-sales index rising to 41.7 from 35.4 in February. The retail-sales index fell to 39.6 from 44.0 in February.
The states covered by the RMI survey are Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.