By Daniel Leussink

TOKYO (Reuters – Japan’s household spending saw an increase for the third month straight in October. But, it was slower than expected as consumers struggled to shake off the impact of the coronavirus epidemic.

This third-largest country has been slow to recover from the global health crisis. As local COVID-19 infection rates fell, analysts expect that consumer sentiment will improve in the fourth quarter.

After a 0.6% drop in household spending in September, and a 3.0% decline in August, the government data revealed that October’s household spending was down 0.6%. This is in line with the median forecast for market conditions in a Reuters poll.

After September’s state of emergency, which was used to stop the spread of the virus in September, positive month-on-month numbers were posted. It was slightly less than the forecasted 3.6% rise.

As manufacturers struggle to meet a shortage of chips worldwide, policymakers hope that domestic demand will rebound. They are also being hit hard by rising raw material prices.

However, separate data from Tuesday indicated that inflation-adjusted real wage growth fell by 0.7% in October. It was the second consecutive month with this decline. These numbers are a warning sign for consumer sentiment and could lead to a sustained recovery.

Last month, Japan’s government revealed a $490billion spending plan. It is trying to restore its economy and counter a worldwide trend towards unwinding crisis mode stimulus.