Retail sales were on the soft side of expectations at quarter-end. Although February's monthly change was revised up a tick, March saw only a flat performance that undershot the market consensus by 0.3 percentage points. This was the first month in 2024 that volumes have not risen. Even so, the latest outturn was still firm enough to boost annual growth from minus 0.3 percent to 0.8 percent, its highest reading since March 2022.

Excluding auto fuel, the picture was rather weaker with purchases down 0.3 percent versus February and up 0.4 percent on the year.

The stable overall monthly performance was attributable to a 0.7 percent fall in food offset by gains in both non-food, ex-auto demand (0.5 percent) and auto fuel (3.2 percent). Household goods (2.4 percent) and the other stores category (1.8 percent) enjoyed a very strong month but non-specialised stores (minus 3.8 percent) were particularly weak alongside non-store retailing (minus 1.5 percent). In line with February, very wet weather may have had a negative impact.

Today's update puts first quarter total volume sales fully 1.9 percent above their fourth quarter level (ex-auto fuel up 1.6 percent) ensuring a tidy positive contribution from the sector to GDP growth. The resilience of household spending should leave investors anticipating no cut in Bank Rate until much later in the year. To this end, the March update puts the UK RPI at 14 and the RPI-P at 12, both values showing economic activity in general running slightly ahead of market expectations.

Retail sales have outperformed expectations so far in 2024 and, if correct, a consensus 0.3 percent monthly rise in March would confirm a solid contribution to quarterly GDP growth.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

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.