It’s good news for the interior design industry this holiday season: the latest report from the American Society of Interior Designers (ASID) has shown that inquiries for interior design projects are at their highest in three years. In addition, small design firms have experienced the most growth this year and residential design overall is on the upswing.

“The U.S. economy remains on firm footing and economic growth," said Jack Kleinhenz, an economist for ASID Research. “Business conditions for the design industry continue to indicate momentum and usher further improvement in home improvement and construction activity.”

In the third quarter of 2014, the ASID Interior Design Billings Index (IDBI) registered 60.5, while inquires rose to 69.5. The ASID indices are centered on 50 percent—above 50 indicates expansion and below 50 contraction.

Read on for highlights from the report:

-    Research shows that billings and inquiries reported by industry members have remained on an upswing for the majority of 2014 with scores above 50 (any score over 50 indicates growth), for the past 21 months. For September, close to half of survey participants (49 percent) reported a minimum five-percent increase in new project inquiries; 35 percent reported a similar increase in billings.

-    While the IDBI for firms of all sizes was 50 or above, small firms—those with two to nine employees—achieved an IDBI score of 67 in September, while sole-practitioner firms scored 52.3.

-    Although firms in every region saw increased Index scores for September, only firms in the West and the South showed consistent monthly gains over the third quarter. Throughout the year, firms in the Northeast and Midwest experienced volatile fluctuations in their billings, according to data reported to ASID.

-    Both single- and multi-family residential billings have shown ongoing improvement throughout the past four quarters, with single-family billings illustrating the more steady gains. The commercial segment, however, sustained its downward trend, with only the office segment ending on a positive note. Similarly, in the institutional sector, only healthcare ended the quarter above 50, while government and education sectors reported declining billings during the third quarter.

The IDBI was produced by ASID Research, under the leadership of research consultant Andy Whittaker, in partnership with Kleinhenz and Russ Smith, both of Kleinhenz and Associates. The index is compiled from a monthly ASID survey of 300 geographically diverse firms that primarily offer interior design services or offer interior design services as part of architectural, engineering and other related practices. Resulting perspectives on current and future business conditions for the interior design industry are helpful indicators of changes in the direction of economic activity.