Retail sales decreased slightly less than expected in January, when they were down 0.3 percent from the previous month, for a 12-month increase of 0.9 percent. The advance estimate for February points to a 0.1 percent advance.

With today's report, Econoday's Relative Performance Index stands at 12, indicating a minor outperformance of the economy that continues to limit the odds of an imminent rate cut by the Bank of Canada. In addition, retail sales volumes actually rose 0.2 percent in January, indicating that the contraction was price related. That being said, rate cuts remain on the table this year. While the central bank stressed that progress getting underlying inflation down to target was slow, it pointed out in its minutes of the March 6 meeting released Wednesday that monetary policy was working"largely as expected." As the Council weighed the risk of waiting too long to lower interest rates, it indicated it would cut rates should its economic projections materialize."However, there was some diversity of views among Governing Council members about when there would likely be enough evidence that these conditions were in place," the minutes said.

When looking at consumer spending, the decline in retail sales in January was concentrated in three of nine sectors, led by a 2.4 percent drop in motor vehicles and parts without which sales increased 0.5 percent. Food and beverage sales contracted 0.9 percent, and clothing, clothing accessories, shoes, jewellery, luggage and leather goods were down 0.5 percent.

On the upside, gasoline and fuel was up 0.9 percent. Core sales excluding motor vehicles and gasoline and fuel, were up 0.4 percent on the month, led by a 3.0 percent gain in sporting goods, hobby, musical instrument, book, and miscellaneous sales.

Regionally, sales decreased in four provinces, led by British Columbia and Quebec.

Retail sales in January are expected to fall 0.4 percent on the month to partly reverse a mostly as-expected 0.9 percent rise in December.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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.