Japan's wage-earning households spent 0.4 percent less in real terms in July than they did a year earlier, the fourth straight month of decline, the government said Friday.

The downswing slowed from June's 3 percent, however, due in part to an increase in outlays for learning and leisure, the Ministry of Public Management, Home Affairs, Posts and Telecommunications said in a preliminary report.

Average spending by wage-earning households came to 345,890 yen, with a ministry official describing the situation as not deteriorating, although it continues to be sluggish.

He cited a recovery in the seasonally adjusted index on spending, which stood at 98.6 against the 2000 base of 100, a level close to the 99 reported in both April and May.

Household spending is a key gauge of personal consumption, accounting for about 60 percent of the country's gross domestic product. Wage-earning households comprise about 60 percent of total household spending.

Expenditures for learning and leisure rose 4.2 percent for the first upturn in three months, due to increased spending on such services as amusement parks, movies and Internet access, the official said.

Spending continued to be robust for communication fees, up 25.2 percent for the 16th consecutive monthly climb, thanks to robust use of mobile phones.

The fall in spending for motor vehicles contracted to 3.6 percent from June's double-digit tumble, while expenditures on housing increased 10.5 percent because of home renovations.

But reduced outlays on foodstuffs -- down 1.1 percent for the sixth straight month -- and clothing and footwear -- 4.7 percent lower for the third month -- continued to contribute most significantly to dragging down overall spending. Food spending holds the heaviest weight in household expenditures.

Expenditures continued to tumble, by 20 percent, on household durable goods, including refrigerators and washing machines, which were popular purchases before the April 1 implementation of a new recycling law.

In contrast, spending on air conditioners, which also fell under the recycling law, jumped 33.7 percent due to hot weather this summer.

Income fell 3 percent to average 612,918 yen, due partly to a 5.3 percent drop in summer bonuses.

The reduced income caused the seasonally adjusted ratio of consumption spending to disposable income to rise to 73.1 percent from June's 68.9 percent, the official said.