US consumer confidence slips

A key indicator of US consumer sentiment has fallen back as Americans continue to worry about the state of the job market.

The road to recovery is not a straight line. After three or four months of solid increases, having one step back is not a big surprise.

Carey Leahey, Deutsche Bank

The latest confidence index from the Conference Board, a New York-based private research group, slipped to 94.1, down from January's revised figure of 97.8.

While the latest figure was worse than expected, the Board said consumer spending was still set to remain strong.

But the news rattled Wall Street. From being about 40 points higher in early trade, the Dow slumped more than 100 points on the news, before recovering slightly.

The fall was made worse by a rumour which went round trading desks that US special forces had landed in Iraq - a tale which was quickly denied by the Pentagon.

The Dow ended the day 30 points lower at 10,115.

Job worries

The Board's survey found that Americans still see the job market as weak.

Those saying jobs are "hard to get" rose to 22.8% from 22.5% last month, while those reporting jobs are plentiful fell to 17.8% from 18.4%.

The strength of consumer spending has underpinned the US economy

But the Conference Board said spending should still remain strong enough to underpin the economy.

"While confidence has weakened from January's level, both components of the Index still point to healthy consumer spending in the months ahead," said Lynn Franco, director of the Conference Board's Consumer Research Center.

"The consumer will continue to provide solid spending support as the economy moves into recovery."

Analysts also said the figures should not be blown out of proportion.

"The road to recovery is not a straight line," said Carey Leahey at Deutsche Bank in New York.

"After three or four months of solid increases, having one step back is not a big surprise."

Recovery focus

Most analysts now believe the US economy has passed through the worst of the recession, and debate is now focusing on how strong the recovery will be.

Last week the Conference Board announced that its index of leading indicators rose 0.6% during January.

This was the largest gain for nearly six years and raised hopes that the economic recovery could be stronger than expected.

On Wednesday the Federal Reserve chairman Alan Greenspan is set to testify to Congress on the state of the economy.

Last month Mr Greenspan gave what was seen as an upbeat assessment to the US Senate Budget Committee, saying that the economy appeared to be finally climbing out of recession.