Retailers had a poor December. Following a smaller revised 0.6 percent monthly rise in November, volume sales dropped a sizeable 1.7 percent, their second decline in the last three months and their worst outturn since July 2021. The slide cut annual growth from minus 1.4 percent to minus 2.8 percent, weaker than the market consensus and an 8-month low.

December's setback was largely attributable to the food, drink and tobacco sector where purchases slumped some 3.4 percent versus November. However, even excluding food and auto fuel, sales were down 0.8 percent leaving just auto fuel (0.4 percent) to post a gain.

Today's update puts total fourth quarter volume sales down 0.7 percent versus the previous period and means that the retail sector subtracted from fourth quarter GDP growth. Still, at 3 and 18 respectively, the Swiss ECDI and ECDI-P remain just in positive surprise territory indicating overall economic activity is still performing marginally better than market expectations.

Sales are expected to fall 0.7 percent on the year.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The survey comprises around 4,000 companies with the small-sized firms asked to provide monthly turnover data on a quarterly basis. Statistics are provided in both nominal and volume measures; the latter is the more important for financial markets. The headline figure is the annual growth in sales volumes adjusted for differences in trading days. Seasonally adjusted monthly changes are also provided. Details are limited in the first estimate but a more complete picture is provided with the following month's release.

Consumer spending accounts for a large portion of the economy, so if you know what consumers are up to, you will have a pretty good idea on where the economy is headed. Needless to say, that is a big advantage for investors. 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.