The percentage of bankers in rural parts of 10 states reporting an improved economy since last month is in the single digits, while nearly 20% indicated worsening conditions, according to a monthly survey.
Rural Mainstreet Index remained below growth neutral at 44.1, though it improved from June's 37.9. Any score below 50 suggests a shrinking economy, while a score above 50 suggests a growing economy.
“Farm commodity prices are down by 12.5% over the last 12 months," said Ernie Goss, a professor at Creighton University's College of Business in Omaha, Nebraska, which produces the index.
“As a result, and despite the initiation of $16 billion in USDA farm support payments, only 6% of bankers reported their area economy had improved compared to June, while 17.6% said economic conditions had worsened."
The survey's confidence index, which reflects bank CEO expectations for the economy six months out, improved just slightly to 43.9 from June's 43.8.
“Weak agriculture commodity prices, retail sales, and layoffs have diminished economic confidence among bankers," said Goss.
New hiring equaled layoffs for July with an index of 50.0 compared to June's 51.5.
“Even so, data from the U.S. Bureau of Labor Statistics indicate that employment levels for the Rural Mainstreet economy are down by 372,000, or 8.5%, compared to pre-COVID-19 levels," said Goss. “It will take many months of above growth neutral readings to get back to pre-COVID-19 employment levels for the region."
While the home-sales index rose to 68.2 from June's 57.8, the retail-sales index for July still remained below growth neutral at 41.2, compared to June's 28.9.
“Business shutdowns linked to COVID-19 continue to harm the region's retailers," said Goss.
Bankers expect borrowing by farmers in July to grow but less than was expected the previous month. This month, the index measured 57.4, compared to 63.6 in June and 72.2 in May.