After dipping to its lowest level in four quarters in the third quarter of 2012, the Professional Beauty Association's (PBA) Salon/Spa Performance Index (SSPI) is slowly improving—it posted a moderate sequential gain in the most recent fourth quarter due to stronger sales and customer traffic levels.
The SSPI registered 102.4 in the fourth quarter of 2012, a 0.5% increase from 101.9% in the last quarter. The Current Situation Index increased 1.2% to 100.5, although the Expectations Index declined by 0.2% to 104.3.
The SSPI is a quarterly composite index that tracks the health and outlook of the U.S. salon/spa industry. The SSPI is based on responses to PBA's "Salon/Spa Industry Tracking Survey," which is fielded quarterly among salon/spa owners nationwide on a variety of indicators. It is constructed to measure the health of the salon/spa industry in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction. The Index consists of two components: the Current Situation Index and the Expectations Index.
"After a third quarter marked by decline, the professional salon and spa industry experienced growth that was mainly due to increases in retail sales and customer traffic. This improvement boosts optimism that will help the salon and spa industry grow even more in the coming months," said Steve Sleeper, the executive director of PBA.
The Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours and capital expenditures), rose to 100.5 in the fourth quarter, up 1.2% from the third quarter level. The PBA says this improvement came on the heels of the third quarter's 99.3%, marking the first time in nearly three years that the Current Situation Index fell below 100.
Each of the five indicators for the Current Situation Index improved in the fourth quarter, led by an increase in sales and customer traffic. However, despite these across-the-board improvements, the PBS says overall levels still remain below the stronger marks reached in the first half of 2012.
The Expectations Index, which measures salon/spa owners' six-month outlook on five industry indicators (service sales, retail sales, employees and hours, capital expenditures and business conditions) slipped 0.2% to 104.3, marking the second consecutive modest drop. Despite declining 0.2% in the third and fourth quarters, the Expectations Index remains above 100, which PBA says is an indicator that salon/spa owners are optimistic about growth in the coming months.
The decline in the Expectations Index was led by slightly lower optimism on service and retails sales, which are the primary proponents for revenue and growth. Staffing levels are expected to increase for a large percentage of salons and spas, which if comes to fruition, will help benefit the larger economy.