After several years of contraction that began with the onset of the Great Recession in 2008, the interior design industry is beginning to show signs of recovery. Compared to 2010, the number of practicing designers is up, business for many designers is up, and industry is again actively courting designers to get their business. There are some bright spots on the horizon for interior designers, especially the resurging housing market. But with the overall economy likely to experience slow growth in 2013, the design industry, too, will see only modest improvement during the coming year.

Following 14 months of positive readings, the ASID Interior Design Billings Index dipped into negative territory in December, which may reflect a seasonal adjustment rather than a decline in activity. The ASID Inquiry Index of 54.4 in December implies that a greater percentage of ASID respondents expect to experience growth in the coming months.

Other key indicators also give designers reason to hope that business will continue to improve in 2013. For the past several months, the AIA Billings Index regained positive readings, and the January ABI of 54.2 was the highest reported since November 2007. While fluctuating somewhat, the housing market continues to show signs of recovery, with brisk sales of new and existing homes in some areas of the country in January and February. All this housing activity has been good for the remodeling industry. According to the Joint Center for Housing Studies at Harvard University, which produces the Leading Indicator of Remodeling Activity (LIRA), robust spending in the second half of 2012 suggests the remodeling recovery is already underway, and the LIRA projects annual homeowner improvement spending will see accelerating double-digit growth through the third quarter of 2013.

On the commercial front, McGraw-Hill Construction foresees commercial building doubling the rate for 2012, increasing by about 12% in 2013. Hotels, warehouses and office construction probably will not get too many new starts but will likely see increases related to upgrades, energy efficient improvements and retrofits.

Cuts in government spending at the city, state and federal levels have resulted in a slowdown in institutional construction. During 2011, there was a 14 percent decline in the amount of construction starts for public works buildings, which improved slightly, to a three percent decline in 2012. According to McGraw-Hill, this sector of the construction industry can expect to see a one percent decline in starts over the course of 2013, continuing the trend of slow, but steady, improvement.

Institutional buildings in general showed some of the slowest growth patterns. The 11 percent decline in construction starts in 2011 was followed by a 13 percent decline in construction starts in 2012. In the coming year, this sector of the industry is predicted to remain flat.

For more information about industry trends and forecasts for 2013, download a copy of ASID’s 2013 Environmental Scanning Report.