Retail sales were surprisingly weak at quarter-end. A monthly 0.3 percent drop was well short of the market consensus and left the level of purchases at a 4-month low. The drop reduced annual growth from 0.5 percent to also minus 0.3 percent, its first sub-zero reading since February.

June's monthly setback was led by the food, drink and tobacco subsector where purchases fell 0.7 percent after a 1.0 percent bounce in May. However, non-food (ex-auto fuel) demand (minus 0.1 percent) similarly edged lower for a second straight month and the headline decline would have been steeper but for a 0.5 percent increase in auto fuel.

Regionally, both France (minus 0.2 percent) and Italy (minus 0.1 percent) recorded modest losses but Spain (0.3 percent) made fresh progress. Note that German data are not expected to be available until much closer to the end of August.

Despite June's setback, second quarter Eurozone sales were still up 0.3 percent versus the first quarter, implying a small positive contribution to the period's GDP growth. Even so, the trend in volumes remains very sluggish. To this end, while the region's RPI (11) indicates a limited degree of overall economic outperformance, the RPI-P (minus 11) shows real economic activity struggling to keep up with market expectations.

Retail sales volumes in June are expected to edge 0.1 percent higher on the month to match May's very sluggish 0.1 percent showing.

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.