Eurozone retail sales slump in May

[July 05, 2011]  LONDON (AP) -- Retail sales in the 17 euro countries dropped by 1.1 percent during May, official figures showed Tuesday, in a further sign that the eurozone economy is slowing down sharply from a largely export-based rebound.

The figures from Eurostat, the EU's statistics office, showed that Germany was primarily responsible for the decline. Sales in the EU's biggest economy slumped by 2.8 percent on the month after April figures were boosted by the later-than-usual Easter.

May's decline was the biggest since April last year and took the annual rate of decline down to 1.9 percent.

Both figures were worse than anticipated in the markets. Analysts had been predicting a 1 percent monthly fall and a 0.6 percent annual decline.

Following a run of mostly soft economic data, analysts said there are clear signs that the economic recovery in the eurozone is slowing down. In the first quarter of the year, Germany helped the eurozone record growth of 0.8 percent.

That was markedly higher than levels recorded in the U.S. and Japan and came despite ongoing worries about Europe's debt problems, particularly in Greece.

For the recovery to become more self-sustaining, analysts say consumers have to start spending more on goods and services. So far, the economic recovery from recession in the eurozone has been based on a big industrial rebound, with Germany's exporters doing particularly well.

Weakness on the consumer side is unlikely to prompt a change of heart at the European Central Bank, which on Thursday is widely expected to raise its benchmark interest rate by a quarter point to 1.5 percent, its second hike since April.

[Associated Press]

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