The National Kitchen & Bath Association’s (NKBA) Q3 Kitchen & Bath Market Index (KBMI) produced its weakest ratings since the third quarter of 2020. The index gauging future market conditions produced a reading of 55.4 in the third quarter, the lowest level in four years, with the exception of the COVID-impacted first quarter of 2020. The low index readings are consistent with a weaker outlook for the kitchen and bath market and overall macroeconomic headwinds.
The quarterly KBMI assesses the overall health of the kitchen and bath industry, along with issues and challenges facing businesses. Ratings of 50 or above indicate industry growth, while ratings below 50 indicate slowing activity. The overall market index in the third quarter was 63.2, its lowest level in two years.
While all index levels remained above 50, the NKBA says each index’s deceleration is indicative of an industry managing its expectations as consumer demand slows and recession concerns rise. Reporting companies expect modest 1.3% full-year 2022 sales growth (as a result of 11% price growth and 9.7% volume contraction), a sharp contrast from expectations of 15.1% full-year sales growth as recently as the first quarter of 2022. Looking ahead to 2023, kitchen and bath industry professionals expect flat to declining year-over-year revenue due to projected market conditions.
“While the index remains above 50, which continues to indicate expansion, there is understandable concern around current and predicted economic conditions, and the potential impact on the kitchen and bath industry leading into 2023,” says NKBA CEO Bill Darcy.
According to the KBMI, nearly one quarter of respondents identified fear of a recession as their top concern, followed by the availability and cost of skilled laborers and the cost of materials. Project cancellations and postponement rates were at their highest levels in 2022 and were reported by 75% of building and construction firms.
