Retail sales were disappointingly soft in June, albeit after a sizeable positive adjustment to the data in May. Volumes fell 0.3 percent on the month following June's revised 0.6 percent gain, the latter being the only increase since January. However, positive base effects saw annual growth climb from minus 2.4 percent to minus 1.4 percent, the strongest reading since last September.

June's monthly setback reflected a 0.3 percent fall in purchases of food, drink and tobacco and a 0.2 percent dip in sales of non-food products, excluding auto fuel. Auto fuel rose 1.0 percent.

Regionally, it was Germany (minus 0.8 percent) and Italy (minus 0.6 percent) that dominated the overall monthly fall but there were gains in France and Spain (both 0.4 percent). Elsewhere it was the usual mixed picture.

Today's update leaves a weak picture of the Eurozone retail sector. Volumes last quarter were only flat at their level in the first quarter when they declined 0.3 percent. Rising interest rates and high, if falling, inflation are taking their toll and sales are unlikely to provide much help to GDP growth this quarter. Still, the June data put the region's ECDI and ECDI-P at 16 and 11 respectively. Following a protracted period of underperformance, economic activity in general is now running just a little hotter than expected.

Retail sales volumes in June are expected to come in unchanged for a second month in a row. Volumes have not risen since January.

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.