US consumer confidence fell in February, snapping two months of gains, as persistent weakness in the labour markets weighed on Americans' assessment of the economy.
The Conference Board, a New York-based private research group, said its closely watched index of consumer confidence fell to 94.1, the lowest level since November and below analysts' forecasts of a dip to 96.8.
The report cone the day before Federal Reserve chairman Mr Alan Greenspan was scheduled to testify to US Congress on the economy. Analysts and investors expect Greenspan to sound a more upbeat note on the economy's prospects for recovery.
"While confidence has weakened from January's level, both components of the Index still point to healthy consumer spending in the months ahead," said Ms 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."
US equity markets erased their early gains and turned negative after the report was released, while Treasury securities rose off their lows.
The dip in confidence comes despite recent evidence that American consumers' voracious spending habits have held strong in the face of recession.
Meanwhile, there has been mounting evidence the US jobs market has stabilised after the rapid deterioration following the September 11th attacks. The jobless rate fell to 5.6 per cent in January from 5.8 per cent and the economy shed 89,000 jobs, fewer than in the prior month.
The confidence index is compiled from a survey of 5,000 US households. A separate survey conducted by the University of Michigan based on telephone interviews with about 500 Americans slipped in early February after rising for four straight months.