Business conditions for the interior design industry were aligned with the broader U.S. economy’s sub-par growth according to results of the American Society of Interior Designers (ASID) Interior Design Billings & Inquiries Index for the July-August period of 2011.
The ASID Interior Design Billings Index fell to its lowest point in July (45.1), then recovered in August (48.6) and increased slightly in September (48.2), but has yet to reenter positive territory (above 50.0).
On a positive note, the Inquiries Index was up nearly 10 points in August (55.1 vs. 45.8 in July) indicating a possible uptick in the fourth quarter.
According to Jack Kleinhenz, chief economist for ASID, “Overall economic growth is expected to pick back up over the next few months. The labor market is improving and consumer spending is up, although employment growth remains weak. What’s in store for the interior design industry in the upcoming months, however, remains unclear. Political and economic uncertainties remain as major speed bumps to recovery, keeping credit tight and jostling consumer confidence.”
Key Index Highlights:
Across market sectors, billings continue to soften compared to the first half of the year. Some sectors did register an increase in September, as well as increases in inquiries.
•Regional Indexes: Northeast 54, Midwest 40, South 47, West 53
•Sector Index Means: Residential 50, Commercial 46, Institutional 43
•In residential, both multi-housing and single family reported increases in September. This is consistent with the Bureau of the Census Construction Spending Report that shows increases in new single and multi-family structures.
•The commercial sector (defined as retail, entertainment, hospitality and office sectors) has been in decline since April and continued to be weak in the third quarter. Office and retail showed some improvement in September.
•Likewise, all three components of the institutional sector (government, education and health care) declined through the summer months. Still, the U.S. Census Construction report for private non-residential construction is showing strength in some of these sectors, including new investment in hospitals and clinics.
These trends may suggest why, even with the national downturn in billings during the third quarter, billings were up in September for all firm size groups except for firms with between two and nine employees. The rebound in office and retail may have influenced the similar rebound in firms with between 10 and 24 employees.
By regions, both the West and the Northeast improved over the last three months, even though the national index showed a downturn. Comparing the ASID and AIA indexes, the Northeast region was the only region that both architectural and interior design firms tracked on a positive trajectory together. Likewise, architectural firms and interior design firms in the South showed that business conditions have deteriorated.
Launched in November 2010, ASID business performance index tracks performance data for billings, inquiries and product sales specific to the interior design industry. The index is based on a monthly survey of 300 firms and provides a tailored perspective on billings, business conditions and economic outlook. The results are compiled into diffusion indexes centered on 50, with scores above 50 indicating an increase in billings, and scores below 50 indicating a decline. More information on the index can be accessed at: www.asid.org/idindex.
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