ASID Interior Design Billings Index 2016 Fourth Quarter Report
The ASID Interior Design Billings Index is a snapshot of the health of the interior design industry.
It is produced by the ASID Research department, under the leadership of ASID Vice President of Research and Knowledge Management David Krantz in partnership with Jack Kleinhenz, Ph.D., and Russ Smith, Ph.D., both of Kleinhenz & Associates. The index, which was begun in November 2010, is a diffusion index compiled from a monthly ASID survey of 300 geographically diverse firms that primarily offer interior design services or offer interior design services as part of architectural, engineering, and other related practices. Resulting perspectives on current and future business conditions for the interior design industry are helpful indicators of changes in the direction of economic activity. The ASID indices are centered on a score of 50 (above 50 indicates expansion and below 50 contraction).
The full report PDF may be downloaded here.
Highlights of the 2016 Fourth Quarter report:
Fourth quarter showed positive demand for the design industry and the overall trend remains positive.
Throughout 2016, the American Society of Interior Designers’ (ASID) Interior Design Billings Index (IDBI) remained above a score of 50, indicating consistent month-over-month growth in billings. December’s ASID IDBI value slipped to 52.9 from the third quarter’s score of 54 but remains in expansionary territory. The December index is weaker than its three-month moving average of 54.1, indicating decreasing momentum, but favorable business conditions remain. The new project inquiry rate increased to 59.3, slightly above its third quarter score of 59.2.
Slippage in demand for two design services size cohorts.
Sole practitioner design firms ended the year with an IDBI score slightly below 50 (49.4). In fact, over the preceding twelve-month period, sole practitioners reported only five months of growth. Sole proprietors and firms employing between two and nine employees experienced modest volatility in demand during 2016, but the pace of growth continued.
ASID firms in the South, West, and Northeast end year well.
Design firms in the South, West, and Northeast ended 2016 on good footing with scores above 50. Design firms in the Midwest reported choppy billings each month of the fourth quarter, ending on a low IDBI score of 45. Month-to-month ups and downs were the norm but all sectors reported at least eight months of month-to-month growth in the past 12 months. The South was the strongest, reporting eleven months with IDBI scoresof 50 or more.
Billing results are positive across all market specializations, except the multifamily sector.
Billings for design firms specializing in single-family and multifamily residential sectors retreated from higher scores earlier in the year, posting scores of 55 and 48, respectively. Business conditions for design firms specializing in the commercial sector and the institutional sector flattened as the IDBI’s three-month moving average moved to scores of 51 and 50, respectively.
Six-month outlook: Stronger business conditions expected by designers.
The design industry continues to expect favorable future outcomes. The six-month business conditions outlook index score of 63.6 for December was markedly higher than September’s (59) and June’s (57) scores. The consistency of these scores (above 50) going back over twelve months argues for continued expansion for the design industry. Taken together, the ASID six-month interior design business conditions index, the Conference Board’s expectations index, and the Dodge Momentum Index remain at recent highs and indicate a positive trajectory for the design and construction industries in 2017.
The labor market continues to improve at a slightly slower pace.
U.S. payroll employment rose 156,000 in December and averaged 165,000 over the past three months, and 180,000 over the past twelve months. Since 2014, annual monthly job gains have slowed as the unemployment rate has approached full employment. Architectural and interior design services job growth continued with monthly net gains in jobs since spring 2016.
Construction spending strengthening.
U.S. construction spending came in well above expectations in November and continued to strengthen on an upward trend. Total construction spending was $1.182 trillion at a seasonally adjusted annual rate in November, an increase of 0.9 percent from the October rate, and 4.1 percent year-over-year from November 2015. This rebound was evident with increased spending across the residential, non-residential, and public sectors.
According to Jack Kleinhenz, ASID economist:
The economy didn’t do particularly well last year with its lackluster 1.9 percent annualized growth rate during the 4th quarter and 1.6 percent rate for all of 2016. The economy is on firmer turf and poised for solid growth in 2017. It is expected to continue to build on its momentum in the consumer and housing sectors. This is good news and supports the positive outlook reported by ASID panelists.