Business

Eurozone retail sales fall to lowest level since 2008

German shoppers
Image caption Sales fell in Germany at their fastest rate in two years

Retail sales in the three largest eurozone economies - Germany, France and Italy - have fallen to their second lowest level on record, a survey says.

The purchasing managers' index (PMI) for the three countries, compiled by research firm Markit , fell to 41.3 in April, down from 49.1 in March and the weakest reading since November 2008.

A reading below 50 indicates shrinking activity.

Another survey from the ECB found small businesses being refused bank loans .

The European Central Bank said banks were increasingly turning down lending requests from small and medium sized companies in the eurozone.

'Deepening recession'

Markit said the retail sales figures indicated it had been a "torrid" start to the second quarter of 2012.

The rate of contraction in Germany was the fastest since April 2010.

French retailers said the presidential elections had disrupted sales and contributed to the biggest drop since the survey began in 2004,

The Markit index has now posted contractions every month since last June.

Trevor Balchin, senior economist at Markit, said: "The latest batch of retail PMI for the eurozone posted a worryingly steep downturn on the High Street.

"The retail data point to a deepening recession at the start of the second quarter."

Markit said its findings suggested that the pace of decline in retail sales as measured by the EU's statistics office, Eurostat, would pick up again in the coming months.

Credit squeeze

The ECB's study looked at more than 7,500 firms and found that while demand for funding had risen between October and March, a fifth of small and medium-sized businesses said the credit situation had deteriorated, compared with 14% in the previous six months.

The biggest fall in credit availability between the two periods was in Belgium, Spain and Italy where big question marks remain over their economic health.

Late on Thursday, Spain had its credit rating downgraded by Standard & Poor's, adding to fears it could follow Greece, Portugal and the Republic of Ireland in needing bailout funding.

Credit conditions in those three countries are extremely tough.

The ECB said almost half of Greek firms had seen credit availability worsen, and about a third experienced this in Portugal and the Republic of Ireland.

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