LONDON, England – Retail sales in the 17 euro countries dropped by 1.1 per cent during May, official figures showed yesterday, 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 per cent 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 per cent.

Both figures were worse than anticipated in the markets. Analysts had been predicting a one per cent monthly fall and a 0.6 per cent 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 per cent.

That was markedly higher than levels recorded in the US 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 per cent, its second hike since April.

Some analysts think that Thursday’s rate increase may be it for this year at least as the eurozone economic recovery slows down further amid weak wage increases, elevated inflation and austerity measures in a number of countries.

“As signs of an economic slowdown pile up, we continue to think that, while the ECB will deliver an interest rate hike this week, it is likely to hold off from hiking rates further this year and probably for the most part of 2012 as well,” said Emilie Gay, European economist at Capital Economics.