Retail sales were soft, albeit much as expected, in February. A 0.8 percent monthly slide fully reversed January's upwardly revised 0.8 percent gain and means that purchases have declined in three of the last five months. Annual growth was minus 3.0 percent, down from minus 1.8 percent and has still not been above zero since May last year.

February's monthly drop reflected a 0.6 percent fall in purchases of food, drink and tobacco, their fourth contraction since last September, and a 0.7 percent decrease in non-food (ex-auto fuel) sales. Auto fuel also saw a 1.8 percent decline.

Regionally, it was a poor period for the larger Eurozone states. Hence, France (minus 1.5 percent), Germany (minus 1.3 percent), Italy (minus 0.4 percent) and Spain (minus 0.3 percent) all posted fresh losses. Elsewhere, the picture was more mixed.

Today's update leaves average overall Eurozone sales in January/February 0.4 percent below their mean level in the fourth quarter. Absent any revisions, March will need a monthly increase of at least 1.6 percent for the retail sector to avoid making a negative contribution to GDP growth last quarter. The February data put the region's ECDI at minus 10 and the ECDI-P at minus 1. In other words, economic activity in general continues to broadly match market expectations.

February is expected to see a 0.8 percent fall following January's modest 0.3 percent monthly rise that was well short of expectations.

Retail sales measure goods that are sold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer. Eurozone retail sales are reported monthly, in volume terms and exclude autos and motorcycles. A limited sector breakdown is presented in the first release but much more detail is available in the following period's release.

Retail sales are important indicators of domestic consumer demand and are monitored closely by analysts as an important input to GDP. 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's a big advantage for investors. The data are available in both value and volume measures although the press release deals only with volume. In addition to the total, the initial report provides a limited breakdown that separately identifies food, drink and tobacco, and (excluding automotive fuel) non-food products. A more comprehensive dataset is only available with the following month's release. Unlike the U.S. and Canada, auto sales are not included in the retail sales data.

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.