Euro-zone retail sales were much stronger than expected in August, data from the EU's statistics office showed yesterday, but according to economists it is still too early to say that the economy has turned a corner.

Eurostat said retail sales rose 0.9 per cent in August from July, and 2.0 percent year-on-year - almost double the market consensus - as rising consumer demand in France, Belgium and Finland offset shrinking sales in Germany.

"It was unexpectedly strong, but it is far too early to call it a turning point," said Lorenzo Codogno, economist at Bank of America.

Retail sales reflected consumer demand, which has long been the weakest point in the economic growth of the euro zone. It has been dogged by high unemployment, and recently by high oil prices, which have hit disposable incomes.

"It is probably true that the trend is improving marginally, but I would remain very cautious in light of the increasing oil prices because the situation may soften again in the fourth quarter as oil prices feed into the economy," Mr Codogno said.

Retail sales in France, the euro zone's second biggest economy, grew 4.1 per cent year-on-year, while Belgium saw a 6.7 per cent surge and Finland a 6.2 per cent expansion. Gains in these countries offset a 0.8 per cent monthly and annual contraction in sales for the third month in a row in Europe's biggest economy, Germany, where unemployment inched up in August to 9.6 percent, from 9.3 percent in July.

Howard Archer, economist at Global Insight, said: "The upside for consumer confidence and spending continues to be held back by the jobs situation across the euro zone.

"While there are signs that labour markets may have broadly stabilised across the euro zone recently, unemployment is still very high across the region and significant, sustainable improvement remains elusive."

A European Commission survey showed last week that consumer confidence remained unchanged at a low level of minus 15 points for the fifth month running in September, despite rising optimism among businesses.

In the whole of the EU, retail sales grew 0.7 per cent on a monthly basis and 2.2 per cent year-on-year, boosted by a 22.6 per cent annual surge in Latvia, 14 per cent in Lithuania, 13.8 per cent in Slovenia and 11.6 per cent in Slovakia.