Retailers had a poor February. Sales fell 0.5 percent on the month, more than the market consensus and following a weaker revised flat performance at the start of the year. The latest drop means that volumes have not increased since last November and now stand at their lowest level since April 2021. Annual growth was minus 0.7 percent, up from minus 0.9 percent in January but only courtesy of positive base effects.

February's monthly setback reflected a 0.4 percent decline in purchases of food, drink and tobacco, compounded by a 0.2 percent dip in non-food, ex-auto fuel demand. Auto fuel was also down 1.4 percent.

Regionally, both France (minus 0.3 percent) and, in particular, Germany (minus 1.9 percent) posted contractions but Spain (0.5 percent) reversed at least some of the previous two months' losses.

Today's update leaves overall Eurozone sales on course to subtract from first quarter GDP growth ignoring any revisions, March will require a 1.8 percent monthly rise to ensure a positive contribution. To this end, consumer confidence seems to be improving but only slowly and remains quite well short of its long-term average. For now, the retail sector looks likely to continue to struggle over at least the near-term. The February data reduce the region's RPI to minus 8 while, at 11, the RPI-P remains above zero. Unexpected weakness in prices continues to mask a modest degree of outperformance by the real economy.

Retail sales volumes in February are expected to fall 0.2 percent on the month after edging 0.1 percent higher in January that left intact a subdued trend.

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.