Eurozone retailers had a very poor March. Sales fell fully 1.2 percent on the month which, even after taking on board a sizeable upward revision to the February data, left purchases well short of market expectations. The latest drop means that volumes have now declined in three of the last four months and so underlines how higher borrowing costs and sharply rising prices are dampening consumer demand. Annual growth was minus 3.8 percent, down from minus 2.4 percent and has still not been above zero since May last year.

March's setback reflected a 1.4 percent fall in purchases of food, drink and tobacco, their fifth contraction in the last six months, and a 1.1 percent decrease in non-food (ex-auto fuel) sales. Indeed, the headline drop would have been steeper but for a 1.6 percent increase in auto fuel.

Regionally, the overall monthly fall was led by Germany (minus 2.4 percent) but France (minus 1.4 percent) also lost significant ground and Italy (minus 0.3 percent) similarly struggled. However, Spain (0.7 percent) extended its recent upward trend.

Today's update leaves overall first quarter Eurozone sales 0.4 percent below their fourth quarter level and so confirms another negative impact on economic growth. Prospects for the current quarter may be a little better but the economy will probably have to look elsewhere for any significant boost. The disappointing March data reduce the region's ECDI to minus 20 and the ECDI-P to minus 15. The signs are that aggressive ECB tightening is beginning to dampen economic activity by more than expected.

March is expected to edge up a monthly 0.1 percent following February's as-expected fall of 0.8 percent.

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.