Japan's household spending fell at the fastest pace on record in May as consumers heeded authorities' calls to stay home to contain the coronavirus pandemic, pushing the world's third-largest economy deeper into decline.

The large spending drop will add to growing pressure on policymakers to ramp up moves to restore confidence among businesses and in particular consumers.

Household spending slumped 16.2 percent in May from a year earlier, government data showed on Tuesday, falling at the quickest pace since comparable data became available in 2001.

The drop, which was larger than a median market forecast for a 12.2 percent fall, extended an 11.1 percent decline in April.

A spending recovery is expected to be slow and fragile as households remain reluctant to loosen the purse strings even after a nationwide state of emergency was lifted in May.

"The pace of recovery is worrying," said Atsushi Takeda, chief economist at Itochu Economic Research Institute.

"Even though the government has rolled out policy measures, it's difficult for their impact to come out quickly."

Overall, the outlook for household spending for the months ahead is dim due to an anticipated rise in job losses, especially among service-sector firms, which is weighing on sentiment.

Separate data on Tuesday showed May inflation-adjusted real wages dropped at the fastest pace since June 2015, adding to signs of stress in the labor market.

Policymakers hope a pickup in domestic demand will be strong enough to bring about an economic recovery, as long as the country is able to avert a big second wave of coronavirus infections.

The government already compiled two spending packages worth a combined 2.2 trillion U.S. dollars to offset the hit from the pandemic, which included cash handouts of 100,000 yen (932 U.S. dollar) per citizen.

(Cover image: A shopper, wearing a protective mask, looks at shelves at a supermarket, Tokyo, Japan, April 7, 2020. /Reuters)