Retail sales rebounded more than expected in April, as they expanded 1.1 percent, for a 12-month increase of 2.9 percent. The consensus in an Econoday survey was 0.2 percent. The flash estimate points to a further 0.5 percent advance in May.

Much of the increase was price related, as volumes were up a more modest 0.3 percent on the month. In April, consumer prices rose 0.7 percent after increasing 0.5 percent in March. The 12-month inflation rate edged up to 4.4 percent from 4.3 percent on higher rents and mortgage interest costs. The core index, excluding food and energy, came down to 4.4 percent from 4.5 percent. Both remain far above the central bank's 2 percent target.

Nominal retail sales gains were widespread across eight of nine subsectors, led by general merchandise (3.3 percent) and food and beverages (1.5 percent).

Core sales, excluding gas and fuel and motor vehicles and parts, were up 1.5 percent. Motor vehicles and parts sales increased 0.5 percent, and gasoline and fuel receipts rose 0.3 percent on the month.

Furniture, home furnishings, electronics and appliances sales were the one category to post a monthly decline, to the tune of 1.6 percent. The other housing-related sector, building material and garden equipment and supplies dealers, recorded a 0.7 percent increase.

Regionally, the recovery was broad based across eight provinces, led by Ontario.

The higher-than-anticipated headline number holds Econoday's Consensus Divergence Index at 42, consistent with an economy that is appreciably stronger than expected. It comforts the Bank of Canada in its analysis of sticky excess demand in the economy.

The central hasn't been satisfied by the response of the economy to its rate hikes, citing persisting excess demand for hiking rates at its June 7 meeting, a possibility that had already been considered in April. Deputy Governor Paul Beaudry stressed strong demand for goods and services, a tight job market and signs of a rebound in the housing market.

That being said, much of today's retail sales performance reflected higher prices, as underlying demand was not as strong as the headline number suggests. The 0.3 percent real sales increase recovered only a small portion of the previous month's 1.1 percent drop.

Retail sales in April are expected to rise 0.2 percent following a weak but as-expected 1.4 percent dip in March.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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 apparel sales are showing exceptional weakness but electronics sales are soaring. 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.