Haircut Index: Economy Grows as People Keep it Short

Michael Hitoshi | Digital Vision | Getty Images

Woman getting haircut

If you are looking for one more indication that consumers are spending again, consider this: Hair salons are seeing an uptick in business as people schedule more haircuts — and we’re not talking the Greek bondholder kind.

According to research by Sageworks, which provides analysis of privately held companies, sales at hair salons are up 5.37 percent since 2009, while hairdressers' profit margins averaged 7.8 percent over the last two years. Profits hit a low of 4.25 percent in 2008, before heading back up.

A Professional Beauty Association index that tracks the industry is in line with Sageworks' data: It found that 57 percent of salon owners saw a same-store sales increase between the first quarters of 2010 and 2011. And a record 34 percent said they added employees over the same period. In addition, spending on hair color increased by 6.3 percent from 2009 to 2010, the report said.

John Paul Dejoria, founder of hair care company Paul Mitchell, told Business Insider that “Beauty salons are the best economic indicator. Typically, customers will visit every six weeks; in downturns, that drops to every eight weeks. When it goes up again, things are on the mend.”

And the outlook for salons continues to look good. According to the Bureau of Labor Statistics, there will be a 15.7 percent increase in the number of hairdressers, hairstylists and cosmetologists by 2020. U.S. News & World Report recently listed hairdresser as No. 12 in its list of Best Social Service Jobs for 2012.

So, according to our Haircut Index, as long as people keep their hair short, the economy will keep growing.

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