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Kitchen/bath industry seeing impact of economic downturn

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The quarterly market index of the National Kitchen & Bath Association (NKBA), the world’s leading not-for-profit trade association for the kitchen and bath industry, is the lowest it has been in two years, confirming fears of industry professionals that the current economic slowdown is likely to continue.

The trade association has released its Kitchen & Bath Market Index (KBMI), which stood at 63.2 for the third quarter of 2022 – the lowest it has been since the third quarter of 2020 – and the future-conditions rating of 55.4 is at its lowest level since the first quarter of 2020. Both run on a
0-to-100 scale.

The quarterly report assesses the overall health of the kitchen and bath industry, along with issues and challenges that industry professionals are facing with their businesses. Ratings above 50 indicate industry growth, while ratings below 50 suggest slowing activity.

While current ratings remain above 50 across all segments (Design, Building & Construction, Retail Sales and Manufacturing), their deceleration is indicative of the industry managing its expectations as consumer demand slows and recession concerns rise.

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Additionally, Q3 2022 KBMI forecasts a 1.3-percent decline in full-year-2022 sales expectations, which compares to full-year growth expectations of 9.4 percent reported in Q2.

“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,” said Bill Darcy, NKBA’s CEO.

“One lesson we have all learned over the past two years, however, is that adaptability is the key,” Darcy said.

“For instance,” he said, “we see it with design firms currently leveraging new brands for better lead times and availability – as well as those who feel their businesses are well-prepared and positioned to meet the challenges of an economic slowdown.”

Asked what keeps them up at night, nearly a quarter (24%) of respondents said the threat of a serious recession was their top concern, with 20 percent noting the lack of availability and higher cost of skilled workers, and concern and 17 percent noting the cost of materials as their major concern.

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