Retail sales surprised on the upside in November. A 1.3 percent monthly bounce in volumes was much stronger than the market consensus and matched the best performance since April 2021. Following an unrevised 0.3 percent drop in October, the increase boosted annual growth from minus 2.5 percent to 0.1 percent, the first positive print since March 2022.

Excluding auto fuel, the picture was much the same with purchases also up 1.3 percent versus the previous month and 0.3 percent firmer on the year.

November's monthly spurt mainly reflected a 2.3 percent bounce in non-food sales, excluding auto fuel. Household goods (3.5 percent) were especially robust as were textiles and clothing (1.3 percent) and the other stores category (2.6 percent). Moreover, with food (0.8 percent) and auto fuel (0.6 percent) similarly posting gains, the headline advance was truly broad-based.

Today's update was probably helped by strong Black Friday sales and increased discounting. In any event, following earlier weakness, the November rise was large enough to leave average sales in the first two months of the quarter unchanged from their mean level in the third quarter. As a result, absent any revisions, December would need at least a 0.6 percent monthly decline for the retail sector to subtract from fourth quarter GDP growth. This reduces, but does not eliminate, the risk of recession by year-end. The November data also boost the UK RPI to minus 7 and the RPI-P to 4, both readings showing overall economic activity broadly matching market expectations.

Retail sales in November are expected to rise 0.6 percent on the month after falling 0.3 percent in October which was much weaker than expected.

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.