Retail sales were soft and a good deal weaker than expected in March. Following a marginally larger revised 1.1 percent monthly increase in February, volumes dropped 0.9 percent, almost double the market consensus and their worst performance since last December. Positive base effects ensured that annual growth still climbed from minus 3.3 percent to minus 3.1 percent but this was its twelfth consecutive negative print.

Excluding auto fuel, the picture was much the same with purchases falling 1.0 percent versus February and 3.2 percent on the year.

March's monthly slide was mainly due to the non-food sector where, excluding auto fuel, sales were down 1.3 percent, their first fall in three months. The decline here was largely driven by non-specialised stores (minus 3.2 percent) and textiles and clothing (minus 1.7 percent) although other stores (minus 0.6 percent) also weakened. Elsewhere, food purchases decreased 0.7 percent but auto fuel edged up 0.2 percent.

However, despite March's setback, overall first quarter sales still rose 0.6 percent versus the previous period. Indeed, this was the first positive 3-monthly growth rate since August 2021 and should help to ensure that GDP growth just about kept its head above water last quarter. Even so, an ECDI reading of 10 is only in positive surprise territory due to the unexpected strength of inflation. The ECDI-P (minus 13) shows that in general, economic activity is falling a little behind market expectations.

Retail sales in March are expected to fall 0.5 percent on the month following a much stronger-than-expected 1.2 percent rise in February.

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.