Salon Stimulus: How Hair Care Is Helping the Economy

Gotten your hair cut lately? More Americans are, according to recent data, and it could be yet another sign that the economy is on the mend.

Visits to the beauty parlor tend to slip during economic downturns, but as budgets get a little more breathing room, customers restart their primping and preening routines. And there's data to back it up. Sales at hair salons are up almost 5.5 percent, according to research by Sageworks, which provides analysis of privately held companies, up from just over a 2 percent increase in 2009. Profits have seen a boost as well, averaging about 8 percent over the past two years, up from a low of just over 4 percent in 2008.

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"It's a particularly interesting phenomenon we're seeing," says Greg Mulholland, financial analyst at Sageworks. "Beauty salons could be a good indicator of an improving economy."

For starters, despite the horror of split ends and dark roots, people don't have to go the salon. The fact that sales are rising shows more people are, which could be a sign that Americans are feeling a bit more secure about their financial situations.

"People might push off [visits to the salon] for a couple of weeks when times are tough, and then go more aggressively when they have a little more free income, so that makes it a relatively strong indicator of how comfortable people are spending," Mulholland says.

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Consumers also have a choice when they go to the salon to spend a lot or spend a little. In the past, customers might have pulled back on the number and quality of services they paid for at beauty salons, but growing sales shows people might be splurging a bit more when they visit the salon these days.

"It's not just an 'I either went or I didn't' event and 'I spend the same amount of money,'" Mulholland says. "It might be, 'I go, feel really good about where the economy is and so I can spend a lot of money,' rather than going in and having the most basic treatments done."

The Professional Beauty Association, which monitors industry trends, backs up the data from Sageworks. Its 2011 mid-year review found that 57 percent of salon and spa owners saw sales increase between the first quarter of 2010 and the first quarter of 2011.

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Renewed demand has made hairdressing a hot industry for job seekers, according to the Labor Department, which projects almost 16 percent employment growth for the profession through 2020.

Although there's no hard data yet, the trend in more activity at hair salons does appear to continue through 2011, Mulholland says.

"It's not that 2010 was a boom year and 2011 fell off," he adds. "[The prospect for job growth] combined with sales numbers might be a very good sign for the economy and certainly a good sign for salon owners."

Twitter: @mmhandley

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