Retail sales continued to decline at the start of the quarter. A surprising 0.3 percent drop versus a weaker revised September was well wide of the market consensus and means that volumes have now fallen in three of the last four months. Annual growth was minus 2.7 percent, down from minus 1.3 percent and a 4-month low and sales stand at their lowest level since the Covid lockdown in February 2021.

Excluding auto fuel, the picture was much the same with purchases dipping 0.1 percent versus the previous month and falling 2.4 percent on the year.

October's monthly setback reflected a 0.3 percent decrease in purchases of food and a 0.2 percent slide in the non-food sector (excluding auto fuel). Within the latter, household goods (minus 1.1 percent) had another poor month as did textiles, clothing and footwear (minus 0.9 percent). However, the other stores category (0.8 percent) saw solid demand and, elsewhere, non-store retailing (0.8 percent) similarly made ground. However, auto fuel (minus 2.0 percent) declined by the most since last November.

Today's update may have been depressed by particularly wet weather but a weak underlying trend is clear enough. Sales last month were 0.9 percent below their third quarter average, providing early warning of another probable hit from the sector on fourth quarter GDP growth. The October data duly boost the chances of no change at December's BoE MPC meeting. They also reduce the UK's RPI to minus 13 and the RPI-P to minus 6. While neither reading is very negative, both show overall economic activity falling slightly short of forecasts.

Retail sales in October are expected to rise 0.3 percent on the month after falling an unexpectedly sharp 0.9 percent fall in September.

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.