A key gauge of rural America's financial health improved in October, but that belies serious concerns voiced by community bankers.
Creighton University's Rural Mainstreet Index improved to an overall score of 54.3, compared to September's 51.5. It's now been above the growth-neutral mark of 50.0 for nine consecutive months.
"Our surveys over the last several months indicate that the Rural Mainstreet economy is expanding outside of agriculture," said Ernie Goss, an economics professor at Creighton's Heider College of Business. "However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector."
That was evident in October's farmland and ranchland index, which sank to 34.8, the lowest point this year. It's now below growth-neutral for 59 months in a row. And the farm equipment sales index hit its 62nd straight month below growth-neutral, falling to 33.3.
Researchers found that about one-fifth of the community bank CEOs surveyed expect low farm income and falling farmland prices to present the greatest challenge to banking operations over the next five years.
The confidence index, which reflects expectations for the economy six months out, also hit its low point of 2018, coming in at 42.6, which the report described as "very weak."
"Just as last month, tariffs, trade tensions, and weak agriculture commodity prices diminished the economic outlook of bank CEOs," said Goss.
Still, the news wasn't all bleak. October's employment index rose to 65.7, and the report noted that "the Rural Mainstreet economy is now experiencing healthy job growth."
"Over the past 12 months, the Rural Mainstreet economy added jobs at a 1.6 percent pace compared to a lower 1.5 percent for urban areas of the same 10 states," the report said.