ASID Billings Index for Spring 2011
Growth Slows, Remains Positive
June Drop May Signal Weaker Second Half
Recent data from the ASID Interior Design Billings & Inquiries Index survey show business conditions improving at a modest pace throughout the first half of 2011. Both the Billings and the Inquiries Indexes are above 50 for eight consecutive months, signaling the industry's economic activity continues to expand. Perhaps reflecting a soft patch or the stalled U.S. economy in the first half of 2011, billings trended downward over the 2nd quarter. However, the ASID survey is more recently showing an upturn which suggests further improvement may be in the offing. [Note: The ASID survey reported here was taken weeks before the recent stock market volatility and layoff announcements in the financial sector. These dramatic and unforeseen events are not represented in the survey results or in the following analysis.]
Mixed Improvement Across Multiple Billing Sectors
While the real estate market is expected to languish in the second half of 2011, respondents reported billings for residential single home projects have been consistently above 50 up until June 2011, when they dipped below the 50 mark. Billings from Multi-family and Senior-housing, however, have inconsistent growth, reporting decreases in billings four months out of the eight. This is consistent with the Bureau of the Census Construction Spending Report that shows recent volatility in the multifamily construction spending category.
The ASID commercial sector, defined as retail, entertainment, hospitality and office sectors shows decreased billings for June by ASID survey firms. A decline is evident since April 2011. The one exception is Hospitality, where billings increased notably in the month of June.
All three components of the institutional sector have declined since March 2011. Healthcare/medical continued its decline in June 2011, while Government/Institution and Education sectors reported increased billings in June over those in May.
Conditions differ across regions. Since March, all four regions have struggled to maintain momentum, dipping below 50 for at least one month. Interior design firms in the South, West and Northeast have a June billings index score of above 50, indicating growth in billings for those regions. Firms in the Midwest had been consistently above 50 since February 2011 but reported billings decreases in June.
Improvement in the interior design industry is not broad-based. Sole practitioners and larger firms of 25 or more employees have experienced growth in billings since April, while small and mid-sized firms reported that billings had stabilized or declined.
Product Sales Grow at Slower Pace
Corresponding to designers reports that remodeling and renovation projects are in greatest demand, increases in product sales and specification have been strongest in lighting, fabrics, finishes, flooring and the like. Demand is low for construction-related materials, office systems and equipment. Reports of increases in product sales and specification in the second quarter were down about 10% to 15% in most of the leading categories.
Outlook Uncertain for Second Half
More firms are expecting non-labor costs to rise, along with limited employment growth over the next several months. July brought some unexpected improvement in U.S. employment figures and increased construction spending. Interior designers reported being generally optimistic that conditions would improve by the end of the year. That was before August's economic turmoil, the effects of which are unknown at this time.