JAPAN’S household spending rose less than expected in February and real wages tumbled at the fastest pace in more than three years, raising concerns about the hit to the consumer sector from heightening global uncertainties.

The data is likely to be discussed by policymakers worried that risks to the export sector from ongoing trade disputes may discourage firms from raising wages, which in turn would hurt consumption.

The 1.7-percent year-on-year increase in household spending was less than the median estimate for a 2.1-percent increase and followed a 2-percent increase in January.

Taken with separate wages data, also released Friday, the batch of numbers suggest household income may not be strong enough to underpin consumption at a time when exports and output are weakening due to the Sino-U.S. trade war.

While those concerns were somewhat offset by a Cabinet Office gauge of economic performance improving slightly in February, the broad mix of indicators suggest the government could come under pressure to delay a planned sales tax hike and turn to the Bank of Japan (BOJ) for help in supporting the economy.

“Labor shortages are not pushing up wages, and you need wages to rise for inflation expectations to rise,” said Norio Miyagawa, senior economist at Mizuho Securities.

“The BOJ is on hold for now, but it may have to come up with something if there is another downside shock to the economy.”

The growth in household consumption in February was driven by spending on autos and mobile phone charges.

Inflation-adjusted real wages in Japan fell 1.1 percent in February from a year ago, the fastest decline since June 2015.

The soft household sector indicators follow signs of similar weakness in the corporate sector.

Japan’s business mood slumped to a two-year low in the March quarter, a central bank survey showed April 1, highlighting the impact the trade war was having on sentiment and economic activity.

Factories across Japan depend heavily on selling electronic parts and heavy equipment to manufacturers in China, which leaved Japan exposed to tariffs.

While the softness in Japan’s consumer sector casts a cloud over the outlook for 2019, other indicators Friday showed not everything was dire in the economy.

The Cabinet Office’s coincident indicator index rose 0.7 point in February, the first improvement in four months, driven by manufacturers’ forecasts for an increase in output in March and easing concerns that the economy had entered into a recession.

In another positive sign for the BOJ, its quarterly survey of households showed more people expect inflation to creep higher one year and five years from now.(SD-Agencies)