U.S. business activity grew at its fastest pace in more than five years in September. The S&P Global Flash US Composite PMI rose to 58.4 from 56.0 in August. Input costs rose at the fastest rate since October 2022, driven by fuel and transport expenses, adding to inflation pressure the Federal Reserve is already trying to contain.

Key Takeaways

• The Flash US Composite PMI Output Index reached 58.4 in September, a 62-month high and the fourth consecutive month of faster growth.
• The Flash US Manufacturing PMI jumped to 57.0 from 53.9, the strongest improvement in factory conditions since May 2022.
• The Services Business Activity Index rose to 58.7 from 56.5, a 59-month high.
• Employment rose at the fastest rate since June 2022, and manufacturing payrolls grew at the fastest pace since February 2021.
• Backlogs of uncompleted orders rose at the sharpest rate since May 2022, and supplier delays were the most widespread since July 2022.
• Final September manufacturing data will be published October 1, with services and composite data following on October 5.

The Headline Numbers Show Broad-Based Acceleration

The September flash PMI showed gains in both major sectors. The S&P Global Flash US Composite PMI Output Index, a weighted average of manufacturing output and services activity, rose 2.4 points to 58.4. Readings above 50 indicate expansion. September’s level marks the fastest growth since July 2021.

Services led the increase. The Services Business Activity Index climbed to 58.7 from 56.5, the steepest rise in output in more than five years. Manufacturing also recovered. The Manufacturing Output Index rose to 56.7 from 53.1, its fastest reading since April 2022, after three months of slowing production growth.

The headline Manufacturing PMI, which combines new orders, output, employment, supplier delivery times, and inventories, rose to 57.0 from 53.9. S&P Global said all five components contributed to the gain. New orders in manufacturing grew at the fastest pace in nearly four and a half years.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the data point to annualized economic growth of around 5% and a 4% gain for the third quarter overall. Excluding the post-lockdown rebound, he said the improvement in business activity is the largest recorded since early 2015. “Business is clearly booming now in both manufacturing and services,” Williamson said.

Domestic Demand Is Driving the Growth

The composition of demand matters for business owners reading the September PMI. New order growth reached its highest level since March 2022 in services and since April 2022 in manufacturing. S&P Global said the growth came mainly from the domestic market. Goods export volumes continued to fall, and services exports rose only modestly.

That pattern suggests U.S. growth is being driven by domestic spending, not overseas demand. Businesses selling to U.S. customers are seeing stronger order books. Exporters face a weaker picture, and a stronger dollar in recent sessions could add to that pressure.

Capacity Constraints Are Starting to Show

The September PMI also points to strain on operating capacity. Backlogs of uncompleted orders, which S&P Global treats as a key measure of capacity use, rose at the sharpest rate since May 2022, with increases in both manufacturing and services.

Companies responded by hiring. Employment rose at a pace rarely exceeded since comparable data began in 2009. Service sector payrolls grew at the fastest rate since June 2022, and factory employment rose the most since February 2021. Even so, companies reported growing difficulty finding suitable staff.

Supply chains added to the pressure. Suppliers’ delivery times lengthened sharply again, with delays the most widespread since July 2022. Williamson said the bottlenecks are among the most severe in the survey’s nearly 20-year history outside the pandemic period.

For small and midsize businesses, that combination creates operating risk. Strong demand paired with slower supplier deliveries and a tight labor pool can delay fulfillment, strain customer relationships, and push up overtime costs. Rising backlogs point to revenue ahead but also to delivery commitments that may be harder to meet.

Input Costs Are Rising Faster Than Selling Prices

The price data are the most important part of the September report for inflation. Average input costs across goods and services rose at the fastest rate since October 2022. Respondents mainly cited higher fuel and transport costs, and many also reported rising wage pressure.

Service sector input cost inflation reached its highest level since November 2022. In manufacturing, high raw material prices were often linked to supply shortages, although factory input inflation remained below peaks seen earlier this year during the energy price spike.

Selling prices rose more slowly. Output price inflation picked up from August but stayed below the rates recorded from March through July, and competition held back price increases in services. When costs rise faster than selling prices, margins shrink.

Williamson said growing backlogs indicate companies are gaining pricing power, which he described as a concern for the inflation outlook. That suggests the gap between costs and prices may narrow in the coming months as businesses pass through more of their cost increases.

Markets Read the PMI as Pressure on the Fed

Financial markets reacted quickly. Treasury yields rose after the PMI release, and the 10-year Treasury yield reached 5.135%, its highest level since July 2007. Major stock indexes closed lower on September 23.

The report comes a week after the Federal Open Market Committee voted 12–0 on September 16 to raise the federal funds target range by a quarter point to 3.75%–4.00%, its first increase since 2023. The FOMC statement said inflation remains elevated. The committee’s projections showed 16 of 18 participants expecting another increase this year. The next FOMC decision is scheduled for October 28.

For businesses with variable-rate credit lines or loans tied to the prime rate, the September PMI supports the case for higher borrowing costs. Strong growth and accelerating input costs give the Fed little reason to pause.

Service Sector Confidence Lags Behind Activity

Despite the strong activity readings, expectations for the year ahead were unchanged in September. Manufacturers were more optimistic than service providers, and factory confidence is near its long-run average.

Service sector sentiment remained well below trend. Respondents cited cost-of-living pressures, higher borrowing costs, and political uncertainty. The gap between strong current activity and weak service sector confidence suggests many operators see the current growth as fragile.

The Flash Reading Comes With Caveats

The flash PMI is based on about 80% to 90% of total survey responses, collected September 10–22, 2026, from panels of about 650 manufacturers and 500 service providers. Historically, the average absolute difference between flash and final readings has been 0.4 points for the composite and services indexes and 0.3 points for manufacturing.

PMI surveys measure the breadth of change, not its size. A reading of 58.4 means more businesses reported growth than decline. It does not directly measure output. Official data on gross domestic product, inflation, and employment will show whether September’s survey results hold up.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, business, economic, or tax advice. The PMI data discussed are survey-based indicators and do not directly measure overall economic output or guarantee future economic conditions. Readers should consider additional official economic data and consult a qualified financial or tax professional before making decisions based on economic or financial information.

FAQs

What was the September 2026 flash PMI reading?

The S&P Global Flash US Composite PMI Output Index rose to 58.4 in September 2026 from 56.0 in August. It was the fastest private-sector expansion since July 2021.

What does a PMI above 50 mean?

A reading above 50 means more surveyed businesses reported improvement than decline compared with the previous month. A reading below 50 indicates contraction.

Why are business input costs rising?

Survey respondents mainly cited higher fuel and transport costs, along with rising wages. Input cost inflation across goods and services reached its highest level since October 2022.

How does the PMI affect Federal Reserve policy?

Strong growth combined with rising input costs signals inflation pressure, which supports further rate increases. The Fed raised rates on September 16, and its next decision is scheduled for October 28.

When will final September PMI data be released?

Final manufacturing PMI data will be published October 1, 2026. Final services and composite data follow on October 5.

The Federal Reserve’s September 16 rate hike to 3.75%–4% has widened a growing split in the U.S. economy, where consumer spending on retail and dining remains resilient while rate-sensitive sectors including housing, auto lending, and small business financing are deteriorating under borrowing costs not seen in more than two decades.

Key Takeaways

• The 30-year fixed-rate mortgage reached 7.19% following the Fed’s September 16 rate hike, up 38 basis points since Fed Chair Kevin Warsh’s August 28 Jackson Hole speech and more than a full percentage point from a year earlier.
• The 10-year Treasury yield crossed 5% on September 14 for the first time since 2023, directly pushing up mortgage rates, auto loan pricing, and small business borrowing costs.
• U.S. credit card balances reached $1.26 trillion in Q2 2026, a new record for the eleventh consecutive quarter, with the average APR for cards accruing interest rising to 22.15%.
• The NAHB Housing Market Index fell to 32 in September, while August retail sales rose 1.2% month-over-month, beating consensus by 30 basis points, illustrating the divergence between rate-sensitive and consumer-facing sectors.
• There is typically a six-month lag between a housing slowdown and decreased spending on consumer durables, meaning the full impact of current mortgage rates may not reach furniture, appliance, and flooring retailers until early 2027.

The Fed’s First Rate Hike Since 2023 Pushed Short-Term Borrowing Costs Higher Across the Board

The FOMC voted 12-0 on September 16 to raise the federal funds rate by 25 basis points to a target range of 3.75%–4%, the first increase since the committee was still cutting rates in late 2023. Fed Chair Kevin Warsh, who took over from Jerome Powell earlier in 2026, described inflation as “elevated” in his post-meeting press conference and noted that economic activity continues to expand at a solid pace. The September dot plot projects a year-end rate between 4.1% and 4.4%, and futures markets are pricing in another quarter-point hike by December with rates potentially reaching 4.7% by September 2027.

The rate hike arrived in an environment where longer-term Treasury yields had already been climbing for weeks. The 10-year Treasury yield crossed 5% on September 14, reaching levels not seen since 2023. The 20-year yield hit 5.39%. The 2-year yield, which is the most sensitive to rate expectations, closed at 4.745% on September 16, up approximately 10 basis points on the day. Those moves did not occur in isolation. They reflected a convergence of factors: persistent inflation readings, geopolitical risk from the Middle East conflict driving energy costs higher, and the relentless demand for capital to fund artificial intelligence infrastructure buildouts, all competing for bond market financing simultaneously.

Mortgage Rates at 7.19% Have Pushed Homebuilder Confidence to Multi-Year Lows

The 30-year fixed-rate mortgage rose to 7.19% in the wake of the rate decision, a figure that carries weight across the economy far beyond the housing sector itself. The rate is up approximately 38 basis points since Warsh’s hawkish Jackson Hole speech on August 28, and more than a full percentage point above where it stood a year ago. The NAHB/Wells Fargo Housing Market Index dropped three points to 32 in September. NAHB Chairman Bill Owens cited weakened buyer traffic driven directly by rising mortgage rates, alongside higher material costs, rising gas and diesel prices, and persistent labor shortages as compounding factors.

Mortgage originations had already slowed to $530 billion in Q1 2026, per the New York Fed’s Household Debt and Credit Report, and Mortgage Bankers Association data shows applications continuing to decline. The housing slowdown carries a delayed economic effect that extends well beyond the transaction itself. Research consistently shows a roughly six-month lag between declining home sales and reduced spending on big-ticket household goods, including furniture, appliances, carpeting, and home renovation materials. That means the current mortgage rate environment, which has been elevated since late August, may not fully register in consumer durables data until the first quarter of 2027.

Consumer Credit Card Debt Hit $1.26 Trillion While APRs Climbed Past 22%

While the housing market contracts under the weight of higher rates, consumer credit tells a different story about how Americans are financing their daily lives. Total U.S. credit card balances reached $1.26 trillion in Q2 2026, per the New York Fed, marking a new record for the eleventh consecutive quarter and representing a 4.5% increase from a year earlier. The figure has nearly doubled from the $770 billion trough recorded in Q1 2021. Total consumer credit outstanding, which includes credit cards, auto loans, student loans, and other non-mortgage debt, reached $5.17 trillion as of June 2026, a figure that has more than tripled since 2000.

The cost of carrying that debt has increased sharply. The Federal Reserve’s G.19 consumer credit report showed the average APR for credit cards accruing interest rose to 22.15% in Q2 2026, up from 21.52% in Q1. For new credit card offers, the average APR stands at 23.82%. The stock of credit card balances that are more than 90 days delinquent rose from 7.6% in Q3 2022 to 12.8% by Q1 2026, according to the New York Fed’s analysis, though the institution noted that the rising stock rate is partly a compositional effect driven by a slower resolution of previously delinquent accounts rather than a surge in new defaults. The 30-day delinquency rate actually dipped to 2.85% in Q2 2026, the eighth straight quarterly decrease. The aggregate delinquency rate across all consumer debt stood at 4.7% in Q2 2026.

Retail Spending Remains Strong, Masking Weakness in Rate-Sensitive Sectors

The paradox at the center of the two-speed economy is that consumers are still spending at a pace that surprised economists as recently as mid-September. Advance retail sales for August 2026 came in at $773.9 billion, up 1.2% month-over-month and 6.0% year-over-year, well above the 0.9% consensus estimate. Control-group retail sales, the component that feeds directly into GDP calculations, jumped 1.4% after a 0.4% decline in July. Gains were broad-based across gasoline, online retail, and restaurants. The Atlanta Fed subsequently raised its third-quarter GDP growth estimate on the strength of the report.

That resilience has been partially financed by the tax reform effects of the 2025 Big Beautiful Bill. Americans saw approximately an 11% increase in average tax refunds during the first half of 2026, and the Brookings Institution’s Fiscal Impact Measure estimates that the income boost from lower taxes contributed 0.4 percentage points to GDP in the first half of the year. That tailwind, however, is fading as the refund cycle completes, removing a meaningful cushion from both consumer spending and small business cash flow heading into Q4.

Small Businesses Face Financing Costs That Have Not Been This High in Years

For small business owners and founders, the rate environment translates into tangibly higher costs on every form of borrowing that depends on longer-term Treasury yields: SBA loans, commercial real estate financing, equipment leases, and lines of credit. The NFIB Small Business Optimism Index dipped to 98.7 in August 2026 while the Uncertainty Index remained at 89, a full 21 points above its historical average of 68. NFIB Chief Economist Bill Dunkelberg cited weakened sales, supply chain disruptions, and inflation pressures as the primary concerns, with over 20% of small businesses continuing to report that finding qualified labor remains their single biggest problem.

The structural challenge for small businesses is that the Fed’s rate hike mechanism does not distinguish between the parts of the economy that are running warm and the parts that are already cooling. Rate increases apply uniformly, making borrowing more expensive across the board. The sectors that are driving economic strength, particularly AI-related capital expenditure and energy infrastructure, are largely financed by large corporations with access to capital markets. Small businesses relying on bank lending and SBA-backed products absorb the same rate increases without the same ability to pass costs through to customers. That asymmetry is what defines the two-speed economy: the same monetary policy that aims to cool inflation in aggregate is tightening conditions unevenly, squeezing the businesses and households that are most dependent on borrowed capital while barely slowing the sectors that have the cash reserves to absorb higher rates without changing behavior.

Auto loan balances rose to $1.69 trillion in Q1 2026, per the New York Fed, and TransUnion projects 60-plus-day auto loan delinquencies reaching 1.54% by year-end, marking the fifth straight year of increases in that category. The New York Fed’s Joelle Scally noted that “new delinquencies for auto loans and credit cards remain at elevated levels.” For entrepreneurs and small business owners who also carry personal auto loans and credit card balances, the compounding effect of higher rates across every form of debt simultaneously creates a personal financial environment that constrains risk-taking, hiring, and capital investment at precisely the moment the macroeconomic headlines suggest the economy is holding up well.

FAQs

What Is The Current 30-Year Mortgage Rate?

The 30-year fixed-rate mortgage reached 7.19% following the Federal Reserve’s September 16, 2026, rate hike. The rate is up approximately 38 basis points since Fed Chair Kevin Warsh’s August 28 Jackson Hole speech and more than a full percentage point from a year earlier.

How Much Credit Card Debt Do Americans Carry?

U.S. credit card balances reached $1.26 trillion in Q2 2026, per the New York Fed, a new record for the eleventh consecutive quarter. The average APR for cards accruing interest stands at 22.15%, while new card offers average 23.82%.

Why Did The Federal Reserve Raise Interest Rates In September 2026?

The FOMC voted 12-0 to raise the federal funds rate by 25 basis points to 3.75%–4% on September 16, citing elevated inflation and solid economic activity. Fed Chair Kevin Warsh indicated that inflation remains above the committee’s target and that economic indicators across productivity, investment, and domestic spending remain strong.

How Are Rising Rates Affecting Small Businesses?

Higher longer-term Treasury yields translate directly into higher financing costs on SBA loans, commercial real estate, equipment leases, and lines of credit. The NFIB Small Business Optimism Index dipped to 98.7 in August 2026, with the Uncertainty Index at 89, well above its historical average of 68.

When Will The Housing Slowdown Affect Consumer Spending On Furniture And Appliances?

Research shows a roughly six-month lag between declining home sales and reduced spending on big-ticket household goods. The current mortgage rate environment, elevated since late August 2026, may not fully impact consumer durables spending until early 2027.

U.S. retail and food services sales rose 1.2% in August to $773.9 billion, reversing July’s revised 0.5% decline and nearly doubling the 0.7% gain economists had anticipated, according to the Commerce Department’s Advance Monthly Retail Trade Survey released September 16, 2026. The rebound was broad-based, with strength across online retail, restaurants, furniture, and clothing, and it held up even after stripping out higher gasoline prices. The control group, the subset of retail categories that feeds directly into GDP calculations, rose 1.4%, well above the 0.5% consensus, signaling that the consumer spending engine behind roughly two-thirds of U.S. economic output remains intact heading into the fourth quarter.

Key Takeaways

• U.S. retail and food services sales rose 1.2% month-over-month in August to $773.9 billion, per the U.S. Census Bureau. Economists surveyed by FactSet had expected a 0.7% gain. July’s decline was revised to 0.5% from the previously reported 0.6%.
• Year-over-year, total retail sales were up 6.0% compared to August 2025. The three-month June-through-August period was also up 6.0% versus the same stretch a year ago.
• Excluding gas stations, retail sales rose 1.1%. The control group, which excludes autos, gas, building materials, and food services, rose 1.4%, nearly three times the 0.5% consensus estimate.
• Online retailers led the category breakdown with a 2.6% gain. Restaurants and bars rose 1.2%, furniture and home furnishings rose 0.9%, clothing and accessories rose 0.7%, and motor vehicles and parts rose 0.6%.
• The data release landed the same morning the Federal Reserve began deliberations on its September rate decision, adding a consumer-strength data point to the committee’s calculus on whether the economy can absorb tighter monetary policy.

The Rebound Was Broad, Not Just a Gas Price Story

The headline 1.2% figure could be dismissed as a gasoline-price artifact. It should not be. Higher fuel costs did contribute to the topline number, as per-gallon prices for regular unleaded climbed through August amid ongoing supply disruptions tied to the conflict with Iran. But removing gas stations from the calculation only brought the gain down to 1.1%, a margin that still exceeded what most forecasters had penciled in for the full headline.

The control group told a cleaner story. At 1.4%, it outperformed the consensus estimate of 0.5% by a factor of nearly three. The control group matters because it strips out the most volatile retail categories and feeds into the Bureau of Economic Analysis’s calculation of personal consumption expenditures in GDP. A 1.4% control-group print suggests that underlying consumer demand in August was meaningfully stronger than the headline alone captured, and that the third quarter’s GDP calculation will carry a consumption tailwind that was not priced into most economic models at the start of September.

The category-level data reinforced the breadth. Online retailers posted a 2.6% monthly gain, the strongest category performance in the report and a continuation of the secular shift toward e-commerce that has accelerated during periods of high fuel prices, when consumers consolidate shopping trips. Restaurants and bars rose 1.2%, a discretionary spending category that tends to soften early when consumers pull back. Furniture and home furnishings gained 0.9%, and clothing and accessories rose 0.7%. None of those categories are tied to gasoline, and all of them outperformed the prior month.

July’s Dip Was an Anomaly, Not a Trend

The July decline that preceded August’s rebound had raised questions about whether the American consumer was finally hitting a wall. The revised 0.5% drop was the first monthly contraction in retail sales in several months, and it broke a string of positive readings that had been supported by World Cup spending, Amazon Prime Day sales, and the seasonal draw-down of tax refunds that lifted traffic in April and May.

August’s data effectively erased those concerns. The two-month pattern, a dip followed by a stronger-than-expected rebound, is consistent with timing-related noise rather than a structural downshift in consumer behavior. Shoppers who delayed purchases in July appear to have followed through in August, with the added tailwind of back-to-school spending across clothing, electronics, and general merchandise.

The year-over-year comparison provides more durable context. Total retail sales were up 6.0% compared to August 2025, and the rolling three-month June-through-August period was up 6.0% versus the same stretch a year ago. Those figures are not adjusted for inflation, which means real spending growth is lower than the nominal print suggests. But even after accounting for the 3.4% annual CPI rate reported for August, the inflation-adjusted year-over-year gain in retail sales remains positive, a signal that consumer spending volume, not just consumer spending in nominal dollar terms, is still expanding.

What the Data Means for the Fed’s Rate Decision

The retail sales report landed at 8:30 a.m. Eastern on September 16, the same morning the Federal Open Market Committee convened the second day of its September meeting. The timing was not coincidental; the Census Bureau’s release schedule is fixed, and the Fed schedules its meetings around the economic calendar. But the juxtaposition of a hot consumer spending print alongside a rate decision that had already been widely telegraphed as a hike added a specific dimension to the committee’s deliberations.

A Federal Reserve that is raising rates to contain inflation needs evidence that the economy can absorb tighter financial conditions without tipping into contraction. The August retail sales report provided that evidence in clear terms. Consumer spending, which accounts for roughly two-thirds of U.S. economic output, is not just holding up under elevated prices and higher borrowing costs. Consumer spending is accelerating on a monthly basis and maintaining positive real growth on a year-over-year basis. For the Fed, that is both reassurance and complication: reassurance that a rate hike will not push the economy off a cliff, and complication because the same spending strength that supports GDP also sustains the demand-side pressure that keeps inflation above target.

The Fed’s framework for how interest rate decisions are calibrated against incoming economic data depends on exactly this kind of report. A weak retail print would have raised the question of whether the committee was tightening into weakness. A strong print, which is what the committee received, shifts the question to how many more hikes the economy can absorb before spending begins to moderate in a way that would bring inflation closer to target without overshooting into contraction.

Where Consumers Are Spending and Where They Are Not

The category breakdown reveals spending priorities that business owners, retailers, and service providers can map against their own planning cycles. Online retail’s 2.6% gain confirms the channel’s continued share capture, particularly during periods of high fuel prices when the cost of driving to physical stores rises. Restaurants and bars at 1.2% indicate that dining-out spending, one of the first discretionary categories to contract during consumer pullbacks, remains healthy. The furniture and home furnishings gain of 0.9% suggests that housing-related spending, which had been weak for much of 2025 as mortgage rates rose, may be stabilizing even though borrowing costs have not come down.

Motor vehicles and parts rose 0.6%, a moderate gain that reflects a market where high prices and elevated financing costs have stretched purchase cycles but have not stopped transactions. Health and personal care stores posted gains, as did building materials and garden equipment dealers. The categories that declined or posted negligible growth were narrower: electronics and appliances were flat, and sporting goods, hobby, and bookstores saw marginal movement.

For small business owners tracking consumer behavior, the data points to a consumer who is spending broadly but selectively. The strongest gains came in categories where convenience (online retail), experience (restaurants), and necessity (clothing, groceries) converge. Categories that require large upfront outlays or carry higher price sensitivity showed more muted performance, consistent with a consumer who is willing to spend but is still price-aware.

The GDP Implications Are Measurable

The control group’s 1.4% gain carries specific downstream consequences for GDP modeling. The Bureau of Economic Analysis uses the control group as an input for its personal consumption expenditures estimate, which in turn drives the consumer spending component of quarterly GDP. A control-group print this far above consensus pushes the Q3 GDP tracking estimate higher, and several Wall Street forecasting desks updated their models within hours of the release.

The Atlanta Fed’s GDPNow model, which produces a real-time running estimate of quarterly growth, will incorporate the retail data into its next update. Prior to the August retail report, GDPNow and similar nowcasting tools had been projecting moderate Q3 growth in the range of 2.0% to 2.5%. A 1.4% control-group print could push that estimate materially higher, depending on how other September data releases track against expectations.

For entrepreneurs planning Q4 inventory, staffing, and marketing budgets, the retail data provides a concrete planning input. Consumer spending is not contracting. Consumer spending is not merely holding steady. Consumer spending accelerated in August to a degree that surprised the professional forecasting community, and it did so across categories broad enough to suggest the strength is not isolated to a single sector or a single price effect. The question heading into the holiday quarter is whether that momentum sustains through September and October, or whether the combination of higher borrowing costs, elevated fuel prices, and the uncertainty created by the Fed’s tightening cycle introduces friction that slows the pace. The August report, taken on its own, gives more reason for confidence than caution.

FAQs

How Much Did U.S. Retail Sales Rise in August 2026?

U.S. retail and food services sales rose 1.2% in August 2026 to $773.9 billion, according to the U.S. Census Bureau’s Advance Monthly Retail Trade Survey released September 16. The gain nearly doubled the 0.7% increase economists had anticipated and reversed July’s revised 0.5% decline.

Which Retail Categories Grew the Fastest in August 2026?

Online retailers led with a 2.6% monthly gain. Restaurants and bars rose 1.2%, furniture and home furnishings rose 0.9%, clothing and accessories rose 0.7%, and motor vehicles and parts rose 0.6%. Excluding gas stations, overall retail sales still rose 1.1%, indicating the strength was not driven solely by higher fuel prices.

What Is the Retail Sales Control Group and Why Does It Matter?

The control group is a subset of the Census Bureau’s retail sales data that excludes autos, gas stations, building materials, and food services. It matters because the Bureau of Economic Analysis uses it as a direct input for calculating the personal consumption expenditures component of quarterly GDP. In August 2026, the control group rose 1.4%, nearly three times the 0.5% consensus estimate.

How Do August 2026 Retail Sales Compare to the Same Period Last Year?

Total retail sales in August 2026 were up 6.0% compared to August 2025. The rolling three-month June-through-August period was also up 6.0% versus the same stretch a year earlier. These figures are not adjusted for inflation; after accounting for the 3.4% annual CPI rate, real spending growth remains positive but lower than the nominal comparison.