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ASID Interior Design Billings Index (IDBI) - 2019 Q1 Report

First Quarter Billings and Inquiries Rebound.

The strong March IDBI score of 60.4 indicates widespread increases in month over month billings. The March score shows a large improvement over the sub-50 December score of 48.5. The March new project three-month moving average rate was 56.0, an increase from December’s score of 52.5 and a cause for optimism.

Billings Experience Growth Across Size Cohorts.

Billings by firm size were mixed with firms of 2-9 and 10-24 employees reporting scores of 53.5 and 50.1 respectively. Sole practitioners recorded a score of 47.5 compared to 52.1 at the end of the fourth quarter 2018, while the largest firms saw an increase from 33.3 to 50.0 during the same period.

Billings Show Growth Across Geographies in First Quarter.

Interior designers in all regions reported increased activity during the first three months of 2019 with scores above 50. Design activity in the South (51.2) showed a considerable rebound compared to the end of the fourth quarter (46.1). Firms in the Northeast (52.8), Midwest (51.1), and West (50.4) experienced increased activity despite reporting higher scores at the close of the fourth quarter.

First Quarter Billings Up Evenly Across Market Sectors.

The residential sector has experienced strong activity since December. The pace of single family design services activity (60.7) was the best it’s been in the last four years, while the multifamily sector also posted a strong first quarter (54.0), a pick-up of nearly six points since December. Design activity for industrial and commercial purposes has been in contractionary territory for the last four quarters. Interior designers operating in the institutional sector reported an IDBI score of 47.9, while those in the commercial sector reported a score of 48.8.

Six Month Outlook – Stronger Business Conditions Expected.

At 59.4, the March six-month outlook score is the strongest, most optimistic outlook since June of 2018. The design industry remains optimistic about the near-term business conditions with 93 percent of respondents believing conditions will either be about the same or better than they are now.

The ASID six-month interior design business conditions index, the Conference Board’s expectations index, and the Dodge Momentum Index, taken together, reflect an improving broader economy and continued design spending over the next six months.

Labor Market Continues at Solid Pace.

The employment market remains solid well into its tenth year of expansion, with employers adding 196,000 jobs in March. The January and February figures were revised slightly higher, bringing the average monthly gain to 180,000 in the first quarter, compared with a 223,000 per month average in 2018. The unemployment rate was unchanged at 3.8 percent. Architectural and Interior Design (A&E) services job growth continues with net gains in jobs for both professions, with an addition of 800 interior design jobs added in February. The labor market posted a much-needed rebound in March, which should bolster consumer confidence and offset fears that the economy is slowing or on unstable ground.

Pace of Construction Spending Remains Elevated.

U.S. construction spending was $1.32 trillion in February at a seasonally adjusted annual rate, up 1.1 percent from a year earlier. Private residential spending rose 0.7 percent in February but declined 3.4 percent on a year-over-year basis. Nonresidential construction spending fell 0.5 percent for the month and squeezed up 0.1 percent compared to the same month a year ago. Public construction spending in February jumped 3.6 percent for the month and 11 percent from February 2018.

Overall Economic Assessment from Jack Kleinhenz, ASID economist:

The past few months have been a dramatic period for the nation’s economy. There are a lot of moving parts and crosscurrents from a volatile stock market to trade tensions that pulled momentum from the economy in the first quarter. A downshift in confidence and consequent deceleration in consumer spending are the major causes. However, underlying consumer fundamentals including job & wage growth and healthy household balance sheets continue to support spending. While the economy slowed, a pick-up in growth is anticipated in the coming months. Moreover, the recent drop in mortgage rates should help to spur housing sales and home improvement spending.

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