Retailers saw demand contract again in mid-quarter. A 1.9 percent monthly drop in sales was much steeper than the market consensus and means that purchases have now declined in each of the last four months. Volumes stand at their lowest level since February 2021.

Sales of food decreased 1.7 percent versus January while non-food was off 1.0 percent. Internet and mail order declined a sharper 2.8 percent.

The February update leaves average purchases in the first two months of the quarter well below their average level in the fourth quarter of last year. Accordingly, the sector looks certain to subtract from first quarter GDP which also now seems all the more likely to be negative. However, today's data leave both the German RPI (21) and RPI-P (39) above zero and so show overall economic activity at least running somewhat ahead of market expectations.

Sales volumes are expected to rise 0.3 percent in February versus January's weaker-than-expected 0.4 percent decline that indicated retailers were continuing to struggle.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision but much greater detail is provided in the following month's release.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. 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. However, by excluding the services sector, changes in retail sales data can differ significantly from those in total household spending.