Bank CEO sentiments fell to their lowest mark since the start of the pandemic amid weakening agricultural conditions, according to Creighton University’s October Rural Mainstreet Index.
The index fell to 35.2 from 37.5 in September. “Weak agriculture commodity prices, sinking agriculture equipment sales, elevated input costs and falling farmland prices pushed the overall reading below growth neutral for the 14th straight month,” said Ernie Goss, chair in regional economics at Creighton University.
The economic growth outlook remained stunted as low commodity prices and negative farm cash flow combined with falling farm equipment sales over the past several months. The related index increased to a still-weak 29.6 from 22.9 in September.
The region’s farmland index fell to a six-year low of 38.5 from 43.8 in September. “Elevated interest rates and higher input costs along with below breakeven grain prices have significantly reduced farmer demand for ag land,” Goss said.
Farmland prices fell for the fifth time in the past six months, while the index for farm equipment sales dropped for the 15th straight month. Sixty-two percent of bankers said the financial position of farmers in their area had worsened over the past six months, with the remaining seeing unchanged conditions.
The index for farm equipment sales fell to 18.8 from 19.0 in September, its 15th straight month of falling below growth-neutral. “Higher borrowing costs, tighter credit conditions and farm income losses are having a negative impact on the purchases of farm equipment,” Goss said.
Other October report findings included:
- The loan volume index increased to 73.1 from 68.8 in September. The checking deposit index increased to 63.7 from 41.3, while the index for certificates of deposits and other savings instruments grew to 63.5 from 56.5.
- The vast majority of bankers said former President Donald Trump would be the most supportive of the rural economy, with fewer than 4 percent indicating Vice President Kamala Harris and 11.1 percent naming another candidate.
- The new hiring index increased to 50 from 43.5 in September.
- The home sales index increased to 46.3 from 43.8 in September. Regional retail sales remained weak, increasing to 36 from 30.4 the previous month. “Higher consumer debt, elevated interest rates and weaker farm income are cutting into retail sales,” Goss said.