Retail sales staged a partial rebound in November. Following an unrevised 2.8 percent monthly slump in October, volumes rose 1.1 percent, slightly stronger than the market consensus. This extended the switchback path that began in the middle of the year and lifted unadjusted annual growth from minus 6.5 percent to minus 5.7 percent. However, volumes were still at their second lowest level since April 2021.

Food demand saw a 1.3 percent decline and was down 5.7 percent on the year. By contrast, non-food purchases rose 2.1 percent versus October but were still some 6.1 percent below their level in November 2021. Internet and mail order also fell a monthly 1.3 percent.

November's limited recovery puts average overall volume sales in the first two months of the quarter 1.7 percent below their mean level in the third quarter. This leaves December needing an improbably sharp 4.7 percent monthly bounce just to prevent a quarterly decline. As such, the retail sector looks very likely to have subtracted from fourth quarter GDP growth. More generally, today's update reduces the German ECDI to minus 21 and the ECDI-P to minus 8, both measures now indicating a degree of overall economic underperformance versus market expectations.

Retail sales are expected to rise 0.9 percent on the month in November after falling a disappointing 2.8 percent in October.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision but much greater detail is provided in the following month's release.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report. However, by excluding the services sector, changes in retail sales data can differ significantly from those in total household spending.