ASID Reports Interior Design Firms Ended 2014 with Continued but Slowed Business Improvement

U.S. interior design firms ended 2014 with continued but slowed business improvement, according to the American Society of Interior Designers (ASID) Interior Design Billings Index (IDBI). The index registered 52.3 at the end of the fourth quarter in 2014, compared to the 60.5 registered at the end of the third quarter. However, the index has remained above 50—the baseline score indicating growth—for eight consecutive quarters.

Both large and small firms reported year-end billings increases as 2014 drew to a close. Sole practitioners, however, scored below 50 (47.7) for the second consecutive month.

Greater distinctions in billings are found in market segment reporting. Design firms specializing in single-family and multifamily residential real estate reported growth at year end, with scores of 53.4 and 53.5, respectively. The average annual IDBI score improved from 51 in 2013, to 54 in 2014, demonstrating positive momentum.

The pace of growth improved for the office sector during 2014, with IDBI scores above 50 in seven out of 12 months. On the other hand, the specialization areas of retail, entertainment, hospitality, healthcare, government, and education had erratic performance and underperformed. In fact, billings for firms specializing in Entertainment and Hospitality reported a decline in billings for 10 out of 12 months in 2014, with average annual scores in the mid-40s.

At year’s end, design firms in both the residential and contract segments voiced positive expectations for the first six months of 2015, with 97 percent of survey participants anticipating steady or improving business conditions.

Design firms located in the Midwest region reported accelerated growth in November and December. While firm billings in the south were well above 50 in the fourth quarter, their pace has slowed from the prior quarter. Business conditions remained weak for firms located in the northeast and west as indexes dipped below 50. Some of the weakness may be attributed to the slower pace of housing demand in recent months.

Looking forward, the design industry remains positive in its outlook. The six-month business conditions index score of 72.3 for December—six points higher than December 2013—suggests continued expansion.

“The industry ended 2014 on solid footing as design firms experienced supportive business conditions,” says ASID Economist Jack Kleinhenz, Ph.D. “The economic fundamentals for the broad economy are supportive and upbeat with continued job growth and with stronger consumer and business confidence that should support more spending. With the economy shifting into a higher gear, the design industry should experience expanded activity.”

Many of the ASID members who participated in the monthly IDBI survey also voiced optimism for current business conditions and the months ahead.

“New construction is our stimulus package,” says Colleen Johnson, owner of In-Site Design Group in Colorado. “It affects thousands of people, industries and manufacturers and it is slowly coming back. The worst is over!”