After increasing slightly in the third quarter of 2013, the Professional Beauty Association's (PBA) Salon/Spa Performance Index (SSPI) rose 0.7 percent in the fourth quarter of 2013, climbing to its highest level in nearly three years. Positive sales and traffic, higher staffing levels and an increase in capital spending all contributed to this increase. Furthermore, the Current Situation Index increased by 0.6 percent to 101.8, while the Expectations Index increased by 0.8 percent to 104.9.

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.

 "The growth we saw in the fourth quarter shows us the continued resiliency of the professional salon/spa industry. Overall indicators and feedback from beauty professionals across the country continue to be overwhelmingly positive, which leads us to expect steady growth into 2014," said Executive Director of PBA Steve Sleeper.

 The Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours and capital expenditures), stood at 101.8 percent, rising 0.6 percent from the third quarter. The Current Situation Index has remained above 100 for the fifth consecutive quarter, which marks expansion in the industry indicators.

 Service sales, staffing levels, customer traffic levels and capital spending in the fourth quarter of 2013 were stronger. Fifty-six percent of salon/spa owners reported an increase in same-store service sales between the fourth quarters of 2012 and 2013. Similarly, 52 percent of spa and salon owners reported an increase in retail sales, up from 40 percent in the third quarter. In contrast, spa and salon owners reported a slight dip in capital spending in the fourth quarter. While this area did not post concerning results, it countered the positive indicators.

 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) posted a solid gain in the fourth quarter of 2013. Each of the five industry indicators stood above 100 with increases over third quarter percentages. The Expectations Index continues to remain above 100, which indicates that salon/spa owners are optimistic about growth in the coming months.

 Salon/spa owners were most positive on growth relating to service sales, retail sales and the general direction of the economy. Similarly, 54 percent of spa and salon owners plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 45 percent last quarter and the highest level in three years.

 The full SSPI report and the "Salon & Spa Tracking Survey," along with other helpful research on the professional beauty industry, can be found at probeauty.org/research.