* Manufacturers only a tad less pessimistic -Reuters Tankan
* Service-sector sentiment flat on weak consumption
* Manufacturers, non-manufacturers see confidence improving
* BOJ minutes offer few clues on whether exit near
By Izumi Nakagawa and Leika Kihara
TOKYO, Aug 14 (Reuters) - Japanese manufacturers were slightly less pessimistic in August but the pace of the recovery in sentiment 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 consumer spending, 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.
"The Reuters Tankan result indicates that Japan will see only a slow economic recovery," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.
"Japan's personal consumption is believed to have turned up in April-June, but the recovery is likely to prove only temporary. Unless personal consumption grows, business confidence will not recover fully."
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.
With the outlook highly uncertain, the Bank of Japan is likely to keep interest rates near zero and remain cautious about ending unconventional steps aimed at easing corporate financing conditions when they expire in December.
Some BOJ policymakers said ending the measures could be justified if financial conditions improve further, minutes of the board's July 14-15 meeting showed on Friday.
But the same board members also said the measures could be extended again if conditions do not improve enough.
AUTOS STILL BLUE
The manufacturers' sentiment index for Reuters Tankan 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.
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.
The small rise in August reflected caution among carmakers and transport equipment manufacturers about slow sales and sluggish corporate spending.
Automakers grew more pessimistic, with some complaining of weak sales and severe competition despite a recent jump in demand for low-emission cars spurred by subsidies included in the government's $600 billion stimulus spending.
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. (Additional reporting by Rie Ishiguro; Editing by Edwina Gibbs)