Retail sales were very weak in July. Volume sales slumped fully 2.3 percent on the month, more than reversing June's smaller revised 1.5 percent gain and their worst performance since July 2021. The decline slashed annual growth from 1.0 percent to minus 2.2 percent, a 3-month low and missed the market consensus by a wide margin. Purchases now stand at their lowest level since May.

July's monthly drop reflected a 3.1 percent fall in sales of food, drink and tobacco and 1.4 percent decrease in non-food demand, excluding auto fuel. Auto fuel was up 0.9 percent.

The monthly data have been particularly volatile of late but today's update puts overall volumes down 0.7 percent versus their mean level in the second quarter. They also leave the Swiss ECDI and ECDI-P in negative surprise territory at minus 20 and minus 23 respectively. In other words, economic activity in general continues to fall some way short of market expectations.

Annual sales growth is expected to edge up from June's 1.8 percent to 2.0 percent in July.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The survey comprises around 4,000 companies with the small-sized firms asked to provide monthly turnover data on a quarterly basis. Statistics are provided in both nominal and volume measures; the latter is the more important for financial markets. The headline figure is the annual growth in sales volumes adjusted for differences in trading days. Seasonally adjusted monthly changes are also provided. Details are limited in the first estimate but a more complete picture is provided with the following month's release.

Consumer spending accounts for a large portion of the economy, so 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 is a big advantage for investors. 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.