February’s fall in eurozone retail sales was unexpectedly severe amid shrinking consumer spending.

On an annual basis, retail sales fell by 4% in the 16-nation eurozone region during the month. They were down 0.6% from January’s figures.

It was confirmed in November 2008 that the eurozone was in a recession, after negative growth in the second and third quarters of the year.

Retail sales have been under pressure from rising European unemployment.

The eurozone now includes 16 nations that use the euro as their national currency, after Slovakia adopted the euro at the beginning of the year

Unemployment across the zone rose to its highest level in almost three years in February, at 8.5%, or 13.47 million, up from 8.3% in January.

Last week the European Central Bank (ECB) cut interest rates to a record low of 1.25% from 1.5%.

The bank has signalled it may cut borrowing costs again by a quarter of a point in May and is considering other ways to boost demand in the economy.

“February’s fall in eurozone retail sales confirms that spending is not benefitting from sharp falls in inflation,” said Jennifer McKeown of Capital Economics.

“What’s more, given the rapid deterioration in labour market conditions, consumer spending will probably remain very weak in the near term at least, despite the relatively healthy state of household finances.” (Via BBC)