Retail sales expanded for the first time in four months in October. However, a minimal 0.1 percent increase versus September was still on the soft side of the market consensus and, despite positive base effects, left volumes 1.2 percent below their level a year ago.

The overall monthly gain was wholly attributable to the non-food sector where, excluding auto fuel, purchases rose 0.8 percent on the month, their first increase since July. Food, drink and tobacco slumped 1.1 percent and auto fuel was down 0.8 percent.

Regionally, Germany (1.1 percent) posted its first advance in five months but there were fresh falls in France (1.0 percent) and Spain (0.4 percent). Elsewhere it was the usual mixed picture.

Today's update leaves intact a gently declining trend in overall Eurozone volume sales. October was 0.2 percent below its average level in the third quarter and the 3-monthly rate is now a lowly minus 0.8 percent. The sector looks likely to subtract again from GDP growth this quarter. Even so, with the region's RPI and RPI-P standing at minus 5 and 13 respectively, a minor shortfall in overall economic activity versus expectations remains only due to surprisingly weak prices.

Retail sales volumes in October are expected to rise 0.3 percent on the month following a 0.3 percent decline in September. Sales volumes in September were at their lowest level since April 2021.

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.