Retail sales rose 0.2 percent on the month in August, just short of the market consensus and, following a small downward revision to July, their first increase since May's minimal 0.1 percent advance. Flattered by positive base effects, annual growth now stands at 0.8 percent, up from minus 0.1 percent last time.

August's modest monthly gain was roughly evenly split between food, drink and tobacco (0.2 percent) and non-food, excluding auto fuel (0.3 percent). This was the latter's first rise since April.

Regionally, both France (0.5 percent) and Spain (0.4 percent) recorded fresh increases while Italy was only flat. Note that German data, currently still unavailable, are due for release next week.

The August report puts average Eurozone sales volumes in the first two months of the quarter 0.1 percent below their mean level in the April-June period. This means that, absent any revisions, September will need a monthly increase of at least 0.3 percent just to hold the third quarter flat. Accordingly, retail sales continue to trend largely sideways, providing minimal support to economic growth and strengthening the argument for another cut in ECB interest rates next week. That said, with the region's RPI at minus 9 and the RPI-P at minus 1, economic activity in general is still broadly meeting market expectations.

Retail sales volumes in August are expected to rise 0.3 percent on the month after July's 0.1 percent rise. The annual rate is expected to be at 1.0 percent which would compare with minus 0.1 percent in July.

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.