Eurozone retailers started the second quarter on a soft note but at least March was not as poor as originally reported. Purchases were only flat in April, falling short of the market consensus, but following a March decline that was trimmed by fully 0.8 percentage points to 0.4 percent. Even so, volumes have still only risen once since last November. Positive base effects lifted annual growth from minus 3.3 percent to minus 2.6 percent but this was its seventh sub-zero reading.

April's stability masked a 0.5 percent monthly rise in non-food (ex-auto fuel) demand that offset a 0.5 percent decrease in food, drink and tobacco and a hefty 2.3 percent slide in auto fuel. Regionally, France (minus 1.3 percent) had a difficult period but there were monthly gains in Germany (0.8 percent) and Spain (1.4 percent). Elsewhere it was the usual very mixed picture.

Today's update leaves intact a decidedly weak profile to Eurozone retail sales. Purchases in April were 0.4 percent below their first quarter average and matching their lowest level since April 2021. Moreover, although inflation is now falling, with the ECB almost certain to tighten again next week, the near-term outlook remains poor. The April data leave the region's ECDI (minus 37) and the ECDI-P (minus 22) mired in negative surprise territory and may mean that that aggressive ECB rate hikes are now dampening economic activity by more than expected.

After March's very poor 1.2 percent monthly fall, retail volumes in April are expected to rise a limited 0.2 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.