Retail sales decreased 0.8 percent in July, as expected, entirely due to weaker activity as volumes also dropped 0.8 percent. Declines were widespread across eight of nine subsectors.

The advance indicator for August points to retail sales recovering 1.0 percent. Looking ahead, the Bank of Canada expects slow population growth and the weakness in the labor market to weigh on household spending in the coming months.

In July, motor vehicles and parts edged up 0.2 percent, the only category to record higher sales from June. By contrast, gasoline and fuel fell 0.9 percent. Excluding these two categories, core sales contracted 1.2 percent after rising 2.2 percent in June.

A 1.3 percent decrease in food and beverages, representing about 19 percent of total sales, led July's weak performance.

Housing-related sales were also down over the month, with building material and garden equipment and supplies down 2.1 percent and furniture, home furnishings, electronics and appliances down 0.6 percent.

Regionally, sales decreased in five provinces, led by a 1.6 percent drop in Ontario.

While overall sales were down in July, e-commerce sales increased 2.2 percent, accounting for 6.1 percent of total retail trade, up from 6.0 percent in June.

The consensus sees retail sales down 0.8 percent in July from June, in line with the preliminary Stats Canada estimate.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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.