RETAIL sales across the 17 European Union countries that use the euro rose by more than expected in May, official figures showed yesterday, in a welcome development that may mean the eurozone has exited its recession.

Eurostat, the EU's statistics office, said yesterday that retail sales during May were 1 percent higher than April and that meant the annual decline eased to only 0.1 percent from 1 percent.

The monthly rise 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 in August.

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.