The retail sector continued to struggle in July. Volume sales rose just 0.1 percent on the month, matching the market consensus but reversing only a fraction of June's steeper revised 0.4 percent fall and leaving an essentially flat trend. Positive base effects were largely responsible for lifting yearly growth from minus 0.4 percent to minus 0.1 percent.

July's minimal monthly gain was led by food, drink and tobacco where purchases rose 0.4 percent after June's 0.7 percent decline. Non-food (ex-auto fuel) demand was up just 0.1 percent following a 0.2 percent drop while auto fuel fell 1.0 percent, its third decrease in the last four months.

Regionally, both France (0.1 percent) and Spain (0.5 percent) recorded gains modest rises. Note that German data are currently still not available due to the changeover to new data requirements.

Overall Eurozone sales in July were 0.1 percent below their average level in the second quarter and so make for a soft start to the current period. Moreover, with consumer confidence still beneath its historic norm and, in recent months, moving mainly sideways, near-term prospects for a significant pick-up look slim. Another cut in ECB interest rates next week would be more than welcome. That said, the region's RPI (22) and RPI-P (24) remain quite well above zero meaning that economic activity in general is running ahead of market expectations.

Retail sales volumes in July are expected to rise 0.1 percent on the month after June's unexpectedly weak 0.3 percent fall. The annual rate is also seen at 0.1 percent which would also compare with minus 0.3 percent.

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.