Consumption remains sluggish despite wage hikes.

Japan’s economy shrank at an annualized 1.8% from January to March compared to the previous quarter, according to revised figures by the Cabinet Office, up from a 2% drop announced last month.

The revised figure compares with a median forecast of an annualized 2% contraction by economists surveyed by QUICK.

According to the latest figures, private consumption, the main pillar of GDP, shrank 2.9% compared with the initial 2.7% drop, confirming a fourth consecutive quarter of decline. Corporate investment contracted 1.7%, an improvement from the preliminary 3.2% decline. Exports, meanwhile, fell 19%, while imports dropped 12.7%.

“The overall upward revision is due to the change in private inventories so it is not something to view positively,” said economist Kazuma Kishikawa of Daiwa Institute of Research. “It means that automobiles were in inventories and were thus not shipped.”

The export decline was worse than the preliminary 18.7% contraction, a revision which Kishikawa called “uncommon” and linked to problems at Toyota Motor unit Daihatsu Motor, which had halted production following a high-profile safety scandal.

However, the economist is predicting a return to export growth in the current quarter.

“For the April to June period, there will be recovery in domestic automobile production,” he said, though with only “gradual” improvement. “We cannot expect a rapid recovery in exports.”

Meanwhile, consumer spending in April rose for the first time in 14 months to 0.5% from the previous year, according to figures released Friday by the Ministry of Internal Affairs and Communications. The figure rose on an increase in education fees as well as outside dining, thanks to a three-day holiday that did not exist last year.

The Japanese government has been pushing for higher wages. The average base salary in April increased 2.3% year-on-year, according to figures released Wednesday by the Ministry of Health, Labor and Welfare. Although this was a 29-year high, inflation-adjusted real wages still fell for the 25th straight month, showing that inflation continues to overpower wage hikes.