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Last Updated: Tuesday, 29 August 2006, 16:42 GMT 17:42 UK
Jobs anxieties hit US confidence
Shoppers looking at a bag
Consumers account for two thirds of total US economic activity
Worries about the job market have left confidence among US consumers at a nine-month low, official figures show.

The worse-than-expected data from the Conference Board research group sent US shares lower in early Tuesday trading.

Last week, figures for July showed slumps in sales of new and existing homes, prompting fears that a slower housing market could harm US growth.

The data could deter further interest rate rises if the Federal Reserve decides low growth is now a threat.

Markets were subdued ahead of the release due later on Wednesday of the minutes of the most recent Fed meeting, which paused after 17 straight months of interest rate rises.


The board's consumer confidence index slipped to 99.6 in August from 107 in July. Economists had forecast a fall to 103.

Gains in house prices have been one of the main factors helping to underpin consumer confidence. The fear is that should there be a significant slowdown, it would affect retail spending.

US consumers had been surprising financial markets by continuing to spend despite high petrol prices.

The board's present situation index, measuring how shoppers feel about the current economic climate conditions, fell 123.4 in August from 134.2 in July.

And its expectations index, which gauges consumers' outlook, fell to 83.8 in August from 88.9 a month earlier.

"Consumer confidence lost significant ground in August and is now at its lowest level this year," said the research director at the board, Lynn Franco.

"Looking ahead, the glass remains half-empty, as consumers are growing increasingly more pessimistic about the short-term outlook."

Work woes

Those surveyed who said jobs were "plentiful" slipped to 24.4% in August from 28.6% in July.

The proportion who believed work was "hard to get" climbed to 21.1%, from 19.6% a month earlier.

Such sentiment indexes are seen as an accurate gauge of US consumer spending - something that makes up about two-thirds of economic activity.

Poverty falls

Separate data out on Tuesday showed the number of Americans living below the poverty line stabilised in 2005 at 37 million, after increasing for the previous four years.

According to the US Census Bureau, 12.6% of US citizens lived below the official poverty threshold, which is set at $9,973 dollars for a single person and $19,971 for a family of four.

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