U.S. Retail Sales (August 2026)

U.S. retail sales rebounded sharply in August 

• Retail and food services sales rebounded 1.2% m/m in August, reversing July's decline and coming in well ahead of consensus expectations for a 0.8% gain. Adjusted for inflation, sales rose by still strong 0.8%.
• The headline gain was in part driven by higher sales at auto and parts dealers (+0.6%) and a jump in sales at gasoline stations (+3.1%), reflecting both increased activity and higher fuel prices. Meanwhile, sales at building materials and garden equipment stores edged lower (-0.2% m/m).
• Beneath the surface, the report also painted an encouraging picture. Control group sales, which exclude the volatile gasoline, auto, building materials, and garden equipment categories, surged by 1.4% m/m – its strongest nominal gain since September 2024. The gains were broad-based, with spending increasing across all categories, with notable gains in miscellaneous store retailers (+1.9%), electronics & appliance stores (+1.6%), sporting goods and bookstores (+1.2%), and health & personal care stores (+0.9%). Non-store retailers, which mainly include online merchants, bounced back by 2.6% reversing a sharp pullback in July.  
• Spending at bars and restaurants—the report’s only service category—rose 1.2% in August, extending a streak of strong monthly gains since April. Sales were up nearly 6% from a year earlier.
  
   

Key Implications

• Retail sales roared back to life in August following a disappointing performance in July. Stronger results in the volatile auto and gasoline categories, along with a rebound in online sales, played a role but were not the whole story, given the broad-based gains in core sales. Higher prices, including at gasoline stations, also contributed, making the headline gain look somewhat rosier. Even so, sales volumes remained notably higher after adjusting for inflation. This reinforces what we had said last month, that July’s decline was an aberration caused by temporary factors. Underlying consumer demand continues to hold up, supported by a resilient labor market. After adjusting for inflation, Q3 spending is tracking a robust 3% annualized – only a modest deceleration from Q2's 3.4%.
• That said, headwinds are mounting. Ten-year Treasury yields recently hit a multidecade high – briefly pushing above 5% – which is filtering through to higher mortgage and other consumer rates. Higher energy prices are also squeezing households financially at a time when income growth already remains relatively soft. This is likely to lead to some moderation in spending growth as we move into next year. 
  
   
   

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