Retail sales were again much stronger than expected in February and that after a significant upward revision to the January gain. Volumes rose a monthly 1.2 percent, beating the market consensus by a full percentage point and following a 0.9 percent spurt at the start of the year. Annual growth was minus 3.5 percent, up from minus 5.2 percent.

Excluding auto fuel, the picture was much the same with purchases advancing 1.5 percent versus January and falling 3.3 percent on the year.

February's monthly rise was largely attributable to the non-food sector where, excluding auto fuel, sales rose some 2.4 percent. This matched their largest increase since April 2021 and was driven by non-specialised stores (5.5 percent) and textiles and clothing (2.9 percent). Other stores (1.9 percent) also saw solid demand but household goods (minus 0.2 percent) were slightly weaker. Food purchases climbed 0.9 percent while auto fuel declined 1.1 percent.

February's update puts average sales in the first two months of the quarter 0.4 percent above their average level in the previous period. Absent any revisions, this leaves March needing a monthly drop of at least 1.8 percent to prevent the sector from contributing positively to GDP growth. The surprising strength will be one reason for the more optimistic growth outlook described by the BoE in yesterday's policy announcement. To this end, today's data lift both the UK's ECDI and the ECDI-P to 23, signalling a moderate degree of overall economic outperformance versus market expectations.

Retail sales in February are expected to edge 0.2 percent higher on the month following a surprising 0.5 percent rebound in January.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

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 apparel sales are showing exceptional weakness but electronics sales are soaring. 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.