ASID Billings Index for Winter Quarter 2011

Outlook in 2011 Improving but Modest

Upward Trend in Billings Is Broad-based
Recent data from the ASID interior design performance survey shows business conditions improving at a modest pace. Both the Billing and the Inquiry Indexes are above 50 for four consecutive months, signaling the rate of industry growth to be positive.



Modest Improvement Evident in Multiple Sectors
Despite the languishing real estate market, billings for residential, single-family home projects have been consistently strong in the first quarter. While office sector billings have been relatively stable above 50, over the past five months, retail and entertainment sectors have been volatile, each dipping below the 50 mark for at least one month out of the five.

Healthcare/medical showed consistent billings growth over the course of the past five months, but education and government billings remain sporadic. All sectors were trending upward in February and March.



Since December of 2010, all regions have crossed the Billings Index threshold of 50. Persistent increases are seen in the South over the past 4 month but firms in the Northeast and Western states had been languishing right around a score of 50 until March, when both reported improved billings.



While firms with between 10 and 24 employees reported that billings were off by more than 5 percent from the previous month, over the last four months, conditions appear to be improving modestly across different size firms. Larger firms with 25 or more employees are registering much stronger growth.

Product Sales Stronger in Some Categories
Corresponding to designers reports that remodeling and renovation projects are in greatest demand, increases in product sales and specification have been strongest fabrics, finishes, flooring and the like. Demand is low for construction-related materials, office systems and equipment.



Concern Over Rising Prices Dampens Hope for Improved Second Half
More firms are expecting rising non-labor costs over the next several months. Nearly one in two panelists indicated they believe prices (for non-labor costs) will rise, citing higher prices for gasoline, energy and cotton. Expectations of higher input costs are consistent with other business and consumer sentiment surveys, largely reflecting concerns that the recent spike in oil prices will influence other parts of the economy, specifically at the producer level. Consequently, the March business optimism index, while still showing strong support, dropped slightly, from 73.0 in February to 70.8.

There has been welcome progress recently, however, as business investment spending continues, and wages and salaries are rising, due in part to the pickup in employment that has increased on average 233,000 during the first quarter. Looking forward over the next several months, the incoming data are consistent with a relatively restrained growth trajectory. A critical factor influencing the pace of spending and growth is positive and rising confidence among businesses and households. While relative weakness of several economic fundamental will restrain growth in 2011, growth looks sustainable.