Retail sales were much weaker than expected in November. A 0.3 percent monthly fall in volumes followed an upwardly revised 0.4 percent increase in October and reduced annual growth from minus 0.8 percent to minus 1.1 percent. This was the first monthly decline since August but leaves an essentially flat trend around levels last seen in early 2021.

The November decrease was broad-based with only auto fuel (1.4 percent) showing any strength. Food, drink and tobacco dipped 0.1 percent while non-food demand, excluding auto fuel, was off 0.4 percent, its third drop in the last four months. Within the latter, mail order and internet was down 1.2 percent.

Regionally, the headline fall was dominated by Germany where sales contracted fully 2.5 percent. By contrast, France (0.4 percent) and Spain (1.5 percent) both posted gains. Elsewhere, the picture was very mixed.

Today's update leaves average Eurozone volume sales in October/November unchanged from their mean level in the third quarter. Without any revisions, December will need at least a 0.3 percent monthly gain if the retail sector is not to be a drag on fourth quarter GDP growth. Looking ahead, consumer confidence has improved in recent months, but current readings remain historically low suggesting that any meaningful near-term recovery is unlikely. The surprisingly soft November data reduce the region's RPI to 14 and the RPI-P to 28 but both values show recent overall economic activity still running somewhat faster than anticipated.

Retail sales volumes in November are expected to rise 0.2 percent on the month following a marginal and lower-than-expected 0.1 percent increase in October that left volumes down 1.2 percent on the year.

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.