08.03.201823:53:00UTC+00Japan Household Spending Rebounds in January

Japan's household spending increased in January but workers' wages dropped at its quickest place in six months, in an indication that consumption will lose momentum this year and weigh on an economy that is currently facing its longest run of growth in 28 years.

A series of data issued on Friday cast doubt on the Bank of Japan's optimistic projection that a strengthening recovery will prompt firms to hike wages and boost consumption, helping accelerate inflation to its ambitious 2 percent target.

The weakness in wage growth could also reinforce market expectations the BOJ will fall behind far behind major peers in dialing back its massive stimulus program, analysts say.

Household spending climbed 1.9 percent in January from a year earlier, government data showed on Friday, rebounding from a 0.1 percent drop in December.

However, the gain was driven mostly by higher costs for necessities, as unusually cold weather forced households to spend more on fuel and medical treatment, the data showed.

Separate data showed workers' wages after adjustments for inflation dropped 0.9 percent in January from a year ago, marking the biggest decline since a 1.1 percent drop in July 2017.

Service-sector confidence worsened in February for a third straight month to a 10-month low, data showed on Thursday, underscoring the fragility of consumer spending.