Following a poor February, retailers enjoyed a much better March. Sales rose 0.8 percent on the month, just beating the market consensus and their best performance since September 2022. Following a shallower revised 0.3 fall in mid-quarter, March's gain lifted annual growth back into positive territory at 0.7 percent.

However, less promisingly, the latest monthly advance was restricted to the food, drink and tobacco and the auto fuel sectors where purchases were up 1.2 percent and 2.0 percent respectively. Non-food demand, excluding auto fuel, was only flat.

Regionally, both France (1.1 percent) and Germany (1.8 percent) posted overall gains but Spain (minus 0.6 percent) saw its third drop in the last four months.

In fact, despite March's advance, first quarter Eurozone volumes were still only 0.1 percent above their level in the previous quarter, implying just a minimal contribution to real GDP growth. Looking ahead, consumer confidence is rising, albeit from historically weak levels, and a probable interest rate cut by the ECB next month should provide a small boost. On balance, household spending this quarter is likely to grow but only modestly. That said, today's update lifts the region's RPI to 21 and the RPI-P to a solid 41. Economic activity in general is now running quite well ahead of forecasts.

Retail sales volumes in March are expected to rise 0.7 percent on the month after February's poor showing, declines of 0.5 percent on the month and 0.7 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.