Retail sales were very weak at quarter-end. Following a notably shallower revised 0.3 percent monthly dip in February, volumes declined fully 2.4 percent, their worst performance since last October. This was the third decline in the last four months and trimmed unadjusted annual growth from minus 5.8 percent to minus 6.5 percent, matching a 9-month low. Sales now stand at their weakest level since February 2021 and are still some 2.6 percent below their mark just before the arrival of Covid.

March's monthly slide reflected fresh falls in purchases of both food (1.1 percent) and non-food (2.3 percent). Higher food prices yearly inflation hit 22.3 percent in March will have depressed spending on the former while the latter was impacted by particular weakness in online and mail order shopping.

The March data put overall first quarter volume sales 1.4 percent below their level in the fourth quarter of 2022 and so confirm another negative contribution from the sector to real GDP growth this quarter. Looking ahead, consumer confidence has at least improved in recent months but it remains historically soft and household buying intentions are weak. This suggests retailers could also struggle this quarter. More generally, today's update reduces the German ECDI to minus 17 and the ECDI-P to minus 7. Economic activity in general is beginning to fall short of market expectations again.

Retail sales are expected to rise 0.4 percent on the month in March after falling a surprisingly weak 1.3 percent in February.

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.