LONDON (AP) — Retail sales across the 17 European Union countries that use the euro rose by more than expected in May, official figures showed Wednesday, in a welcome development that may mean the eurozone has exited its recession.
Eurostat, the EU's statistics office, said Wednesday that retail sales during the month were 1 percent higher than April and that meant the annual decline eased to only 0.1 percent from 1 percent. The monthly increase was double what was anticipated in the markets and may stoke hopes that the eurozone economy has stabilized and has come out of recession in the second quarter. Figures on how the eurozone's second-quarter gross domestic product has fared are published next month.
Retail sales are a key indicator of economic activity and a vital ingredient for economic growth in a region where many governments are cutting back on spending to get their public finances back into shape.
"May's rise ... may be a sign that improving consumer confidence and the boost to purchasing power coming from low inflation across the eurozone is starting to lift consumer spending," said Howard Archer, chief European economist at IHS Global Insight.
A further encouraging point to emerge from the figures was that the 11 euro countries it has May figures for posted increases. However, those who have yet to release May figures include Greece and Cyprus so it's unlikely that all 17 euro countries saw monthly rises.
Analysts were also keen to point out that one month's figures do not necessarily mean that the eurozone is over the worst. After all, January's 1 percent monthly increase was followed by three consecutive declines.
Even so, the retail sales figures may temper expectations that the European Central Bank will do something substantial Thursday at its monthly policy meeting. Most economists, in any case, predict that it will maintain its main interest rate at the record low of 0.5 percent.