The region’s Rural Mainstreet Index for September shrank to 37.5 from August’s 40.9, the region’s lowest score since the beginning of the pandemic.
A score of 50 is considered growth neutral, while anything below 50 is considered contraction. The index ranges between 0 and 100, with a reading above 50 representing growth. The scores are compiled from surveys of bankers in rural areas of a 10-state region that includes Kansas.
“Harvest has not really started in our area, but a couple of farmers (who always have to be first) have combined some early corn varieties, and the results suggest that the crop will be good but down from 2022 and 2023,” said Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois.
Kansas Individual Indicators
The overall RMI for Kansas in September saw a slight decline to 34.1 from August’s 34.2. The state’s new hiring index also decreased to 39.6 in September, down from 42.3 in August.
According to trade data from the International Trade Association, exports of agricultural goods and livestock for 2024 year-to-date were up by $49.0 million or 6.7% from the same period in 2023. The farmland price index for Kansas fell to 42.3 in September from 43.0 in August.
Regional Numbers
Farmland prices dropped just below neutral for the fourth time in the past five months, at 43.8 in September from August’s 45.5. “Only 4.2% of bank CEOs reported that farmland prices expanded from August levels,” said Ernie Goss, Ph.D., Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Five of the 10 states included in the data saw a fall in the Rural Mainstreet Index (RMI) in September from August, including Illinois, Iowa, Minnesota, Missouri, and Wyoming. The other five states in the study saw an increase in RMI, including Colorado, Kansas, Nebraska, North Dakota, and South Dakota.
Regional Home and Retail Sales
Home sales in the region saw a decrease in September to 43.8 from 50.0 in August. Retail sales came in with a very weak result of 30.4 in September, the lowest reading since June 2020.
“High consumer debt, elevated interest rates, and weaker farm income are cutting into retail sales for the Rural Mainstreet Economy,” Goss said.
Regional Hiring & Banking
The new hiring index decreased to 43.5 in September from 45.5 in August. The loan volume index decreased to 68.8 in September from 75.0 in August. Checking deposits, certificates of deposits, and other saving instruments all saw an increase in August.
Farming Equipment Sales
The farm equipment index saw a slight increase to 19.0 from 16.7 in August. September marks the 14th straight month the index has fallen below growth neutral. Bankers say nearly 40% of farmers will experience negative farm income in 2024 within the region.
“This is the 14th straight month that the index has fallen below growth neutral. Higher borrowing costs, tighter credit conditions, and negative farm income are having a negative impact on the purchases of farm equipment,” said Goss.
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