Retail sales staged a partial rebound in April. Following a shallower revised 1.3 percent monthly drop in March, volumes rose 0.8 percent. However, the increase was short of the market consensus and small enough to reduce unadjusted annual growth to minus 8.6 percent, matching its weakest post since January 2021.

Purchases of food rose 0.5 percent on the month but yearly growth was still negative for a 22nd month in a row. Sector inflation of 17.2 percent remains a key factor hindering sales. Elsewhere, non-food saw a 0.7 percent advance with online and mail order up fully 5.9 percent.

The April data put overall volume sales 0.8 percent above their average level in the first quarter, leaving the retail sector on course to make a positive contribution to GDP growth this quarter. However, while inflation is now falling, it remains high enough to squeeze real incomes and consumers are still very cautious. As such, household spending still looks likely to be subdued near-term. To this end, today's update puts the German ECDI at minus 28 and the ECDI-P at minus 15. Economic activity in general continues to fall somewhat short of market expectations again.

Retail sales are expected to rise 1.2 percent on the month in April after coming in very weak in March, falling 2.4 percent.

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.