Retail sales continued to decline in September. Although August's monthly drop was trimmed to 0.7 percent, a 0.3 percent fall was a little steeper than the market consensus and the third decrease since June. Volumes have not expanded since May and now stand at their lowest level since April 2021. Annual growth was minus 2.9 percent, down from minus 1.8 percent.

The overall monthly decline was wholly attributable to the non-food sector where, excluding auto fuel, purchases fell a sizeable 1.9 percent versus August. Auto fuel was also off 0.9 percent but food, drink and tobacco saw a solid 1.4 percent rise, their first advance in three months.

Regionally, Germany (minus 0.8 percent) and Italy (minus 0.4 percent) posted fresh monthly declines, the former down for a fourth straight month, but partial offsets came from France (0.4 percent) and Spain (0.2 percent). Elsewhere it was the usual mixed picture.

Today's update leaves overall Eurozone volume sales last quarter 0.5 percent below their level in the second quarter, confirming a modest hit to GDP growth. Since September, consumer confidence has weakened and with unemployment now on the rise, prospects for the current period look similarly gloomy. The region's RPI and RPI-P now print at minus 10 and minus 14 respectively, both values indicating a limited degree of undershooting versus market expectations.

Retail sales volumes in September are expected to fall 0.2 percent the month versus a much steeper-than-expected contraction of 1.2 percent in August.

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.