Kitchen and bath industry health and optimism in the fourth quarter of 2019 reached their highest level since the launch of the Kitchen & Bath Market Index (KBMI) report. The National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting's KBMI revealed an "energetic expansion" in the final quarter of 2019 despite showing signs of a slower pace throughout the year. The Q4 2019 KBMI posted a reading of 69.8, well above the previous two quarterly readings of 64.3 in Q3 and 65.4 in Q2. Any reading above 50 indicates positive growth in the industry.
“A strong Q4 is great news for industry professionals and consumers going into 2020,” Bill Darcy, CEO of NKBA, said in a public statement. “As we move into the new year, we’re encouraged that this dynamic industry continues to grow and business outlooks are positive.”
The KBMI is based on online survey data from NKBA members across three metrics: the respondent's last quarter sales growth compared to the same quarter in the prior year, expectations for the next quarter's sales compared to the same quarter in the prior year, and the respondent's view of the overall health of the industry.
Despite a strong fourth quarter, weaker business performance in the first three quarters of 2019 dragged down year-end revenues for NKBA members relative to 2018. Across all segments, the industry reported total revenues were down 0.4% year over year (YOY), compared to 5.8% YOY sales growth reported in 2018.
NKBA members reported feeling more positively about future market conditions than current conditions. The more positive future outlook likely can be partially attributed to an increase in home builds and sales, according the KBMI, due to the future construction and remodeling opportunities these trends provide. Respondents reported expecting robust 10.8% full-year sales growth in 2020, up significantly from the modest mid-single digit growth expectations reported in earlier reports in 2019.
Despite economic uncertainty through 2019, including fears of a recession and the impact of tariffs, NKBA members rated the state of the economy at a 7 out of 10 in the fourth quarter KBMI. Only 7% of respondents rated the economy below a 5. Among respondents, 86% of manufacturers are maintaining or increasing current levels of capital investments, suggesting the industry is confident revenue growth will continue in the short-term. Members also rated industry health at a 7.2 out of 10, up from 6.7 in the previous three quarters.
Despite generally positive outlooks from NKBA members, respondents indicated the cost and availability of skilled workers as their primary business concern. Certain estimates suggested as many as 750,000 jobs will open in the design and construction industry through 2026. Respondents also indicated the cost of materials as a top business challenge and concern.
NKBA members reported countertops are consumers' primary "splurge" item in both kitchen and bathroom jobs. Homeowners also are increasingly trading up on stoves and ranges and cabinets in the kitchen, and vanities, medicine cabinets, and tiled showers in the bathroom, according to the fourth quarter KBMI.
The Q4 2019 KBMI report represents survey responses from 602 manufacturers, retailers, building and construction companies, and design firms who are members of the NKBA.
