South Dakota's economy has shown significant improvement, surpassing the growth-neutral mark in June 2023, according to the monthly index released by Creighton University. The Rural Mainstreet Index, which provides valuable insights into the economic status of 10 regional states and approximately 200 rural communities, relies on input from community bank presidents and CEOs.
South Dakota's index score rose to 51.2 in June, marking the first time since May 2022 that the state has exceeded the growth-neutral level. Notably, South Dakota's index had experienced a decline throughout the summer of the previous year, reaching the 30s, and only managed to climb into the 40s by December. However, the state's economic performance has shown a positive trend overall, with a single dip into the 30s occurring in April 2023.
Two key indicators contributing to South Dakota's economic growth are the farmland-price index and the new hiring index. The farmland-price index, which monitors the prices of crops and livestock received by farmers, rose to 55.3 from 52.6 in the previous month. The new hiring index for June demonstrated growth, reaching 56.3 compared to May's 55.6.
South Dakota's agriculture and livestock exports experienced remarkable growth of 74.9% in 2022 compared to the previous year. These exports, valued at $113 million, primarily found their destination in Mexico, constituting 52.9% of South Dakota's agricultural exports.
South Dakota stands out among the states in the region, as it is the only one to have surpassed the growth-neutral threshold in June. The remaining states, including Illinois, Iowa, North Dakota, and Wyoming, maintained rankings above the growth-neutral level. However, Missouri remained below growth neutral, signaling the need for further economic improvement.
The region exhibited substantial growth in agriculture and livestock exports, with a total value of over $13 billion in 2022, reflecting a 26.5% increase from the previous year.
Bank CEOs in South Dakota expressed concerns about potential challenges ahead, particularly regarding anticipated Federal Reserve rate hikes. Higher interest rates have already impacted farm equipment purchases, with the index highlighting a decline in sales for the third time in the last 31 months.
In conclusion, South Dakota's economic outlook has shown significant improvement, with the state surpassing the growth-neutral threshold in June 2023. Positive trends in the farmland-price index, new hiring index, and robust agricultural exports contribute to this optimistic outlook. However, challenges, such as the potential impact of Federal Reserve rate hikes and declining farm equipment sales, still loom on the horizon.
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Categories: South Dakota, Crops, Equipment & Machinery, Livestock, Weather