Demand for services fell in August, reinforcing the view that consumer spending is unlikely to support the ailing economy.
The tertiary index, a gauge of money households and businesses spend on phone calls, power and transportation, slid 1.4 percent from July, the trade ministry said Friday in Tokyo. The median estimate of 31 economists surveyed by Bloomberg News was for a 0.9 percent decline.
Consumers are likely to keep cutting back as job prospects deteriorate, inflation outpaces wage growth and the slumping stock market erodes their wealth. Household confidence hovered near a record low in September, and the Nikkei 225 stock average has since lost a quarter of its value as the world financial crisis deepens.
"Falling wages and the worsening job market are among the reasons why consumers don't want to spend," said Tatsushi Shikano, a senior economist at Mitsubishi UFJ Securities Co. in Tokyo. "With the bleak outlook for the economy, people are likely to keep saving."
Households cut spending for a sixth month in August, when wages fell for the first time this year. The unemployment rate jumped and job seekers had to compete for fewer positions.
Renown Inc., a clothing company, widened its loss forecast this week and said it plans to eliminate 300 full-time jobs by the end of January as sales slump.
"We expect consumer spending to weaken further as global stocks fall," Renown said in a statement. " It's likely that the severe business environment will continue."