* Service-sector sentiment flat on weak consumption
* Manufacturers, non-manufacturers see confidence improving
By Izumi Nakagawa
TOKYO, Aug 14 (Reuters) - Japanese manufacturers were slightly less pessimistic in August but the pace of recovery slowed, a Reuters poll showed, suggesting that the effect of huge government stimulus spending is wearing off.
Service-sector sentiment was flat as weak wages and rising unemployment hurt private consumption, which makes up about 60 percent of the economy.
But both manufacturers and non-manufacturers expect conditions to improve in the next three months, reflecting their belief that Japan has put the worst of the global crisis behind it, the Reuters Tankan showed on Friday.
Japan's economy is expected to have grown 1.0 percent in April-June after four straight quarters of contraction due to a pick-up in exports and personal consumption spurred by stimulus spending at home and abroad, another Reuters poll showed.
But economists warn that any recovery will be fragile because doubts about the sustainability of end demand remain with recent output gains driven mostly by government stimulus. GDP figures are due on Monday.
"It is hard to forecast when demand from businesses will recover because corporate capital spending remains weak," lamented a transport equipment maker surveyed for the Tankan.
The manufacturers' sentiment index rose one point to minus 42 in August, improving for the fifth straight month from a record low of minus 78 in March, thanks to a pick-up in exports and industrial output. For a table, click.
The manufacturer confidence figure in the Reuters Tankan has around a 95 percent correlation with the Bank of Japan's influential quarterly tankan survey. For a graphic tracking the two surveys, click:
http://graphics.thomsonreuters.com/089/JP_RTKN0809.jpg
The Reuters Tankan is calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A negative figure means a majority of those surveyed are pessimistic.
AUTOS STILL BLUE
The small rise in August reflected caution among carmakers and transport equipment manufacturers about slow sales and sluggish corporate spending.
Automakers grew more pessimistic despite pent-up demand for low-emission cars, thanks to subsidies included in $600 billion government stimulus spending.
Despite the boost, some complained of weak sales and severe competition.
Sentiment among non-manufacturers was unchanged at minus 38, not far from the record low of minus 44 hit in May, although they see conditions improving over the next three months.
Among service-sector firms, confidence worsened at retailers and among real estate and construction firms.
"A deterioration in consumer attitude has become conspicuous since the summer bonus payments in June," a retail firm said.
Japanese wages marked a record annual drop and the jobless rate hit a six-year high in June, as smaller summer bonuses curbed consumer spending.
"Consumers are putting off home purchases because they are worried about job losses and falling incomes," a construction firm said. (Writing by Rie Ishiguro; Editing by Rodney Joyce)