Retail sales were surprisingly robust in June. A 0.7 percent monthly increase was much stronger than the market consensus, even after taking account of a downward revision to May (now 0.1 percent). Volumes have now increased in each of the last three months for the first time since February-April 2021. Annual growth climbed from minus 2.3 percent to minus 1.0 percent, its least negative reading since March 2022.

Excluding auto fuel, the picture was much the same with purchases rising 0.8 percent versus May and declining 0.9 percent on the year.

June's monthly gain was again relatively broad-based. Purchases of food were up 0.7 percent while the non-food sector, excluding auto fuel, climbed 1.0 percent. Within the latter, non-specialised stores (1.9 percent) and the other stores category (1.5 percent) had another good month as did household goods (1.4 percent). Non-store retailing (0.2 percent) also expanded but textiles and clothing (minus 0.4 percent) declined for the third time since February. Elsewhere, auto fuel was down 0.3 percent.

The latest data put overall volumes last quarter 0.4 percent above their first quarter level meaning that the sector made a small positive contribution to GDP growth despite high inflation and rising interest rates. This will make a BoE rate hike next month all the more probable. To this end, the June report lifts the UK ECDI to 10 and the ECDI-P to 38, both measures showing economic activity in general also outperforming market expectations.

Retail sales in June are expected rise just 0.1 percent on the month following a 0.3 percent gain in May.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

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.