Dec 07 (Reuters) - Japan's household spending posted an annual drop for the third straight month in October, though the pace of decline slowed, as consumer sentiment struggled to stage a convincing recovery after coronavirus curbs ended.
The world's third-largest economy has lagged other nations in its recovery from the health crisis, mostly due to sluggish consumption. Analysts expect consumer sentiment to pick up this quarter as local COVID-19 infections fell.
Household spending fell 0.6% in October from a year earlier, after a 1.9% decline in September and a 3.0% drop in August, government data showed, matching the median market forecast in a Reuters poll.
The figures highlighted that consumers' mood was still cautious even after state of emergency curbs to contain the virus ended in September, said Takeshi Minami, chief economist at Norinchukin Research Institute.
"This was a weak result," he said. "It feels like spending is slowly picking up but not in one go."
The month-on-month figures were positive, posting a seasonally adjusted 3.4% rise, slightly weaker than a forecast of a 3.6% gain and slowing from a 5.0% month-on-month increase in September.
On a year-on-year basis, spending on overnight stays and eating out continued to decline, though the drop was smaller than in the prior month, while that on transportation rose.
Policymakers are hoping a rebound in domestic demand will support the economy as manufacturers navigate a global chip shortage and are hit by surging raw material prices.
