After two consecutive quarters of contraction, ratings for each of four key industry metrics show improvement, including current and future conditions.
By Robert Isler
The year’s third quarterly release of the NKBA/John Burns Kitchen & Bath Market Index (KBMI) saw a continuation, and in some cases an acceleration, of the positive trends seen in Q2. Despite clear industry strength across a number of metrics and good headwinds, it’s likely premature to break out the Champagne, given the recent nationwide spike in COVID-19 cases and an economy that is still unsettled.
More than 500 NKBA members in design, building/construction, manufacturing and retail participated in the survey, which compares the latest responses to industry benchmarks from the previous three quarters. In addition, the report delves into shifts, changes, concerns and latest performance for each specific segment.
The overall Kitchen & Bath Market Index registered a rating of 61.9 out of 100, which clearly puts it into expansion territory after having contracted in the previous two quarters. It was a strong leap forward from the 44.2 rating in Q2.
The overall Kitchen & Bath Market Index registered a rating of 61.9 out of 100, which clearly puts it into expansion territory (anything over 50) after having contracted in the previous two quarters. It was a strong leap forward from the 44.2 rating in Q2.
The “Health of the Industry” continued to show improvement as well. It had a rating of 6.9 out of 10, placing it well within the “strong” range. This exceeded the 5.9 from Q2 and even edged out the 6.7 from Q3 2019, prior to the pandemic coming onto the scene. That bears repeating: The health of the industry, based on feedback from over 500 members across all segments, is stronger now than it was before the pandemic began.
The third key metric, current conditions, came in at 56.5. Since 50 is considered in line with the previous quarter, anything above that level obviously means conditions are moving in the right direction. Although the rating remains below the year-ago score of 61.7, with lower project budgets still having an effect, the improvement over Q2 has been dramatic. The rating for last quarter had been an anemic 31.3.
The last of the four industry metrics covers expected future performance. Again, scores above 50 equate with optimism. The Q3 rating was 66.9, squarely in the positive zone. This compares with a 61.9 in Q2. A further look back to Q1 is enlightening. That rating, based on survey responses during the early phases of the pandemic, was a dismal 19.8. In other words, industry professionals at the time expected conditions to absolutely plummet. Clearly, today’s mindset, based on facts on the ground, is very different.
The ratings provided above are composite numbers for the industry. A deeper dive by segment provides additional clarity. Manufacturing consistently has the highest rating, #1 for each of the four metrics. Retail is #2 for except for expected future performance, where it drops to #3. Building & Construction is usually third, while ratings for Design are last, with one exception: this group jumps to #2 for future expectations, a very positive sign. The largest gap among segments is for current conditions. The composite rating, as cited earlier, was 56.5. Manufacturing was well above that, at 63.5, while Design is 10 points behind, at 53.6.
To download the 3Q KBMI report, please click here. It is included in the NKBA membership, and members may download the report at no additional cost. Non-members may purchase the report for $1,995.