Retailers continued to struggle in mid-quarter. Sales fell 1.2 percent on the month which, even after taking on board a stronger revised flat performance in July, was disappointingly weak. Indeed, volumes now stand at their lowest level since last December. Unadjusted annual growth was minus 1.9 percent, up from minus 2.1 percent, but its fourteenth negative print in the last 15 months.

Non-food purchases fell 3.0 percent versus July and 2.2 percent versus a year ago. An 8.8 percent monthly drop in mail order and internet demand had a significant impact. Food was also again weak, down 1.2 percent versus July and 1.5 percent lower than 12 months ago.

Today's report leaves average total volume sales in July/August 0.8 percent below their mean level in the second quarter. Absent revisions, this means September needs at least a 3.0 percent monthly bounce just to keep the third quarter flat. As such, the likelihood is that the sector subtracted from GDP growth, increasing the chances of a contraction in total output. Still, with the German RPI at 14 and the RPI-P at 19, overall economic activity is at least holding up slightly better than forecast.

Retail sales volumes are expected to rise 0.1 percent on the month in August versus July's 0.8 percent decline.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision but much greater detail is provided in the following month's release.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. 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. However, by excluding the services sector, changes in retail sales data can differ significantly from those in total household spending.