/www.bloomberg.com/ By Daisuke Takato
Tokyo, Feb. 7 (Bloomberg) -- Japanese household spending fell for a third month as wages slid and companies cut jobs, pushing the world's No. 2 economy closer to a fourth recession in a decade.
Household spending fell a seasonally adjusted 4.2 percent in December from the previous month after a revised 2.5 percent drop in November, the government's statistics bureau said. Spending fell 2.4 percent in the fourth quarter from the third. It rose 0.3 percent last year after falling for nine years.
Retailers such as Ito-Yokado Co., Japan's largest, struggled in December because shoppers took advantage of early year-end sales and cut spending amid a record-matching 5.5 percent unemployment rate. Falling consumer spending, which makes up more than half the economy, will make it harder for Japan to avoid another recession.
``Consumer spending is -- and will be -- the biggest drag on the economy,'' said Seiji Adachi, an economist at Credit Suisse First Boston Japan Ltd. ``The labor and spending figures suggest that the economy may have already peaked.''
Japanese government bonds rose for a second day before the consumer spending report on expectations that the economy would slow and consumer prices would extend a 4 1/2-year slide. Bonds resumed a rally that pushed 10-year yields to a record 0.75 percent last week.
A government report last week showed that spending by households headed by a salaried worker fell for a sixth straight year in 2002 to a 20-year low. Salaried workers account for about 60 percent of overall household spending.
The economy probably shrank 0.4 percent in the fourth quarter because of a drop in consumer spending and declining business investment, government figures next Friday will show, according to the median forecast of 26 economists in a Bloomberg News survey.
Retailers such as Takarabune Co. have gone bankrupt as sales fell. Takarabune, a furniture retailer, filed for court protection from its creditors last week, becoming the first publicly traded company to go bust this year.
The household spending report surveys spending by 8,000 nationwide households with two or more people.