Key Takeaways:
- All four major K&B industry indices fall in Q2, as economic conditions take their toll;
- Cost of materials and cost of inflation now top the list of member concerns;
- Nearly half of K+B professionals are not confident in the economy.
By Robert Isler
Results from the second quarter NKBA/John Burns Kitchen & Bath Index (KBMI) study were a stark reminder that the kitchen & bath industry is not immune to overall economic turmoil.
The overall KBMI for Q2 was 70.4, the lowest it has been since Q4 2020. The index is an accumulation of members’ read on the health of the industry as well as current and future conditions — all of which had noticeable declines for the quarter.
Although any Index rating above 50 signifies expansion, the Q2 KBMI shows clear warning signs. Nearly half of the kitchen and bath professionals surveyed said they are not confident in the U.S. economy. In fact, the prediction for the Q3 Index based on respondents’ forecasts fell to the lowest reading in over two years, dropping to 61.8. They said rising costs and economic uncertainty are driving the declines.
NKBA members expect business conditions for the upcoming quarter to drop to its lowest level in over two years.
The recent KBMI showed that increased costs of materials and inflation has now overtaken supply chain disruptions as respondents’ primary concerns. Members said year-over-year costs have risen an average of 11 percent, with over 40 percent indicating that they are passing on the increases to clients. Others said they are altering purchase decisions to rein in costs, finding lower-priced alternatives or maintaining costs and accepting lower profit margins.
As inflation remains high and interest rates keep rising, many consumers are pausing planned home improvements. In fact, 59 percent of design firms reported client postponements or cancellations for Q2, a marked increase over the 48 percent in Q1. Building and construction companies experienced similar slowdowns, with 54 percent noting Q2 postponements or cancellations compared with 46 percent in Q1.
According to respondents, reasons for clients’ pullback include concern about inflation’s impact on disposable income and the decline of ready cash for remodels due to increased mortgage rates.
