The fear of recession is no longer a top concern among kitchen and bath executives, offering a glimmer of optimism that there are better times ahead, according to the fourth quarter 2022 NKBA/John Burns Kitchen & Bath Market Index (KBMI) report.
The quarterly KBMI gauges the pulse of the market among nearly 500 NKBA members in four key segments: designers, manufacturers, builders, and retailers. Among the segments, builders were the most confident, giving the overall index a rating of almost 65. Designers’ ratings came in at just over 61 points, retailers’ were just over 60, while manufacturers rated the industry at 58. All segments’ ratings were down from the prior quarter.
Builders said year-over-year sales growth fell to 4.7 percent in 4Q from 6.2 percent in 3Q. However, 39 percent of builders surveyed said they expected new leads to increase in the 1st quarter of 2023, with only 14 percent saying they expected a decrease, way down from 30 percent the quarter before.
Nearly half (45 percent) of executives surveyed said they were prepared for turbulent times, reporting they were highly confident their businesses could weather an economic downturn. Additionally, they reported 5 percent sales growth in 4Q 2022 over 4Q 2021. This reported sales growth shows a modest improvement from 3Q 2022, when executives reported sales growth of 4.3 percent YOY. It is, however, a sharp drop from the 12.1 percent YOY sales growth they had relayed a year earlier.
When kitchen and bath industry professionals were asked what their most serious concern was, the availability and cost of skilled laborers jumped to the top spot, cited by 25 percent of respondents. Fears of a recession – which in 3Q had overshadowed worries about the lack or affordability of skilled labor – fell back to second place in 4Q, with 22 percent saying it was their biggest concern. Cost of materials, inflation, and interest rates rounded out the top five concerns. Executives reported responding to these challenges by changing their pricing structures, adjusting inventory levels and diversifying suppliers, labor sources and subcontractors – and even expanding into other markets and business areas like commercial construction.
The KBMI research is conducted quarterly by NKBA and John Burns Real Estate Consulting to examine the overall state of the K&B industry, current conditions and future expectations, as well as challenges that executives are facing. The 4Q survey netted 474 responses from NKBA members in the four main segments of the industry.
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