Retailers enjoyed a surprisingly strong start to the quarter. Having declined in three of the previous four months, sales climbed a much needed 1.1 percent versus September when they dropped a shallower revised 0.1 percent. The rise easily beat the market consensus and put volumes at a 3-month high. It also boosted unadjusted annual growth from minus 3.9 percent to minus 0.1 percent, a 4-month peak.

October's monthly advance was wholly attributable to the non-food sector where purchases rose fully 1.4 percent. Internet and mail order jumped 2.9 percent. By contrast, sales of food declined 1.3 percent.

Today's report leaves overall volume sales in October 0.7 percent above their average level in the third quarter and so could pave the way for the sector to make a positive contribution to fourth quarter GDP growth. However, the data are very volatile and with consumer confidence still very weak, the risks remain on the downside. To this end, the German RPI now stands at minus 23 and the RPI-P at minus 12, both values showing that economic activity in general is still falling short of market expectations.

Retail sales volumes are expected to rise 0.4 percent in October after September's unexpectedly poor 0.8 percent decline. Year over year, the call is for a gain of 1.9 percent in October after a 4.6 percent drop in September.

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.