BRUSSELS: Consumers in the euro zone held back from spending by more than expected in April, sending retail sales falling by the biggest margin so far this year, as rising unemployment eats into households' ability to splash out on cars and clothes. Sales at shops in the 17 countries sharing the euro fell 1.0 percent in the month from March, the EU's statistics office Eurostat said on Tuesday, tumbling 2.5 percent on an annual basis. Highlighting the worsening economy, both readings were well below forecasts of economists polled by Reuters, who saw contractions of 0.1 percent and 1.1 percent respectively. "Retail sales have not increased, compared to the same period of the previous year, since April 2011," said Dominique Barbet at BNP Paribas in a note before the data was released. With more than 17 million people out of work in the euro zone and governments laying off staff and freezing the salaries of those who remain, households are unable to help revive the stagnant economy. Just more than half of the euro zone's economic output is generated by domestic consumer spending, but as governments seek to bring in their debts and deficits, demand for goods is weak. While consumers spent a little more on food and drink in April, with trade in that sector rising 0.3 percent, purchases of all other items including clothes, cars, furniture and computers fell 1.4 percent in the month. The impact of the bloc's debt crisis and austerity measures were notable in the spending patterns of wealthy Belgium and France, where retail sales fell 1.2 percent and 1.5 percent respectively from the previous month. German shoppers did spend more in April, reflecting the relatively ruder health of Europe's top economy, but the increase was moderate at just 0.6 percent compared to March. Marking the widening divide between northern and indebted, southern Europe, retail sales fell 2.4 percent in Spain and by 2.1 percent in Portugal. Data for Greece and Italy was not provided by Eurostat. European policymakers are desperate to reignite growth and EU leaders will meet for their fourth summit this year in Brussels at the end of June, but the reality is that foreign demand from emerging economies in Asia and Latin America offer the most hope for the euro zone's economy. Even then, with Germany responsible for almost 40 percent of the euro zone's exports, an increase in trade would probably not bring a wide tide of prosperity, economists say. "As things stand, the outlook is bleak: not only is the euro zone in recession, but divergences between the core, especially Germany, and the periphery are widening under the influence of fiscal austerity," wrote Mark Cliffe, global head of financial markets research at ING in London.

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