By Yuzo Saeki and Taiga Uranaka
TOKYO, Feb 10 (Reuters) - Japanese consumer confidence remained mired near record lows in January on fears about jobs and incomes in a deepening recession, but slowing inflation cheered some shoppers.
The weak consumer sentiment reading bodes ill for gross domestic product for the first quarter, as private consumption accounts for more than half of Japanese economic activity.
Confidence in the job market fell to a record low as industries from car makers to tech factories lay off staff and up-market retailers report sliding sales.
The Cabinet Office survey index stood at 26.4 in January, slightly up from a record low of 26.2 in December but still deep in pessimist territory, which is defined as any score below 50.
The Cabinet Office said consumer confidence was still worsening and the slight rise may be no more than a blip, but BNP Paribas economist Azusa Kato took some good news from the data.
"Falls in some prices were a significant boost to consumer sentiment. It appears that a panic-like deterioration in the index is over," Kato said.
Retailers have yet to see a recovery, however. Department stores have been among the worst-hit in the retail industry, with January sales 10 percent below a year earlier, as consumers slash spending on discretionary items such as clothes.
Japan's third-largest chain, Takashimaya Co Ltd, and rivals have been trying to shore up flagging customer spending by bringing forward winter sales, but many in the industry expect sales to keep sliding throughout the first half of the year.
The job conditions component of the consumer confidence index fell for a fourth straight month to a new record low of 14.2.
This index has halved since last September, when the failure of U.S. investment bank Lehman Brothers jolted global financial markets.
Fourth-quarter GDP data due next Monday is widely expected to show the biggest contraction in the Japanese economy since 1974.
Economists expect GDP to have shrunk 3.1 percent in October-December, a Reuters poll showed. (Editing by Rodney Joyce)