BRUSSELS (AFP) - Business activity in the 15 countries using the euro in July fell to the lowest level since November 2001, as consumer spending falls, surveys showed on Tuesday, raming up fears of recession. The eurozone's purchasing managers' index (PMI), compiled by data and research group Markit, fell to 47.8 points in July from 49.3 in June, confirming an earlier estimate. Adding to the bad news, retail sales in the eurozone fell by 0.6 percent in June from the May level and by 3.1 percent on a 12-month basis, a first estimate by the EU statistics office Eurostat showed Tuesday. The contraction in consumer spending "increases the likelihood that the Eurozone economy contracted in the second quarter," said Howard Archer, chief European economist at Global Insight. "Consumers' purchasing power is being squeezed markedly by elevated energy and food prices. Furthermore, tight credit conditions, higher interest rates and rising consumer concerns over both the economic outlook and their personal finances are all negatives for consumption," he added. And that could have an adverse affect on the eurozone jobless rate, which rose for the fourth month running in June. The eurozone PMI survey's component for the services sector fell to 48.3 points in July from 49.1 in June, hitting the lowest level since June 2003. A level below 50 for the index indicates a contraction of activity in the sector. "The latest index signalled a contraction of private sector output for the second month running," with "the rate of decline accelerating to the fastest since November 2001," said Markit and RBS in a joint report. Jennifer McKeown of capital Economics said the fall in eurozone retail sales adds to the risk that overall GDP fell in the second quarter. "The fall has left the annual rate at a record low of -3.1 percent. Clearly, the slowdown underway in the eurozone economy is related to domestic spending and not just external demand," she said. "It looks as though consumer spending could have knocked around 0.3 percentage points off quarterly GDP growth... With other components of growth also likely to have slowed, there is a risk that GDP fell in the second quarter. Given that the surveys point to a fall in the third quarter too, recession risks are mounting." Of the eurozone's biggest economies only Germany registered an increase of activity in July, but the increase was sharply down. In Spain and Italy business activity contracted for the seventh consecutive month while France endured its second straight month of contraction. "Forward looking indicators, notably the accelerating rate of loss of new business and reduction in employment, paint a bleak outlook for the rest of the quarter and raise the possibility that the eurozone will endure a technical recession," RBS head of eurozone economics Jacques Cailloux said. He said a cut in base rates by the European Central Bank was "clearly called for". "But, with output price inflation picking up again, it looks like the ECB will remain focused on upward inflation risks." "The marked fall in retail sales in June and sharper contraction in service sector activity in July according to the purchasing managers' survey add to the mounting evidence that the eurozone economic downturn is deepening." echoed Archer. On Monday the International Monetary Fund said the eurozone should escape a recession but growth is expected to fall significantly. The "central scenario" underlying IMF, EU and European Central Bank projections "is for a significant slowdown, but no recession or prolonged period of sluggish activity," as seen in 2002-2005 the report said. The IMF predicted 1.7-percent growth in the 15-nation eurozone this year and 1.2 percent in 2009. Those figures include "a deceleration in the course of 2008 and a re-acceleration toward trend during 2009," it added. Last year eurozone growth was recorded at 2.6 percent.