By Toru Fujioka Nov. 12 (Bloomberg) -- Japan's consumers became the most pessimistic they've been in at least 26 years, making it unlikely they will spend to support an economy weakened by slower global demand and falling stock prices. The confidence index dropped to 29.4 last month from 31.4 in September, the Cabinet Office said today in Tokyo. It's the lowest since the government began compiling the figures in 1982. Prime Minister Taro Aso last month promised to give 2 trillion yen ($20 billion) to households to alleviate pain from the economic slump. Tumbling stocks and falling profits are adding to consumers' anxiety about paychecks and jobs, making it harder for them to support the world's second-largest economy. ``Given the state of the economy it's no surprise that sentiment fell to a record low,'' said Yoshimasa Maruyama, a senior economist at BNP Paribas in Tokyo. ``Households spending will remain sluggish as worsening profits affect employment.'' Of the four components used by the government to gauge consumer sentiment, the outlook for wages dropped to the lowest on record. Confidence about employment slid 4.1 points, the most since 2004, and that ``suggests consumer spending may get weaker,'' said Shigeru Sugihara, deputy director-general at the Cabinet Office. Personal spending dropped for a seventh month in September as the number of jobs available to each applicant slid to a four-year low and wages grew just 0.1 percent. Bank of Japan ``The economy is becoming more sluggish,'' Bank of Japan Deputy Governor Hirohide Yamaguchi said in parliament yesterday. ``We need to pay close attention to downside risks for the economy given conditions in overseas economies and global financial markets.'' The central bank lowered its key overnight lending rate to 0.3 percent last month after the Nikkei 225 Stock Average plunged to the lowest level in 26 years and the yen surged to a 13-year high. A slew of exporters including Toyota Motor Corp., Canon Inc. and Sony Corp. cut profit forecasts because of the stronger currency and weakening global demand. Toyota, the world's second-largest automaker, said last week it will lay off 3,000 contract workers by the end of March as it forecast earnings will drop by almost 70 percent. Those squeezed profits will hit the small and midsized companies that employ 70 percent of the workforce, Matsuoka said. Confidence among smaller businesses fell to the lowest level in a decade last month, according to Shoko Chukin Bank. To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

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