U.S. consumer confidence for September as reported by the Conference Board fell to 93.3 from an upwardly revised 94.5 in August. The expectations sub-index rose to 96.5 from 95.5 in August.

“U.S. consumer confidence continues to fade against a backdrop of darkening storm clouds — renewed weakness in stocks, potential conflict with Iraq, and persistently sluggish employment conditions,” says BMO Nesbitt Burns. “In this light, today’s reported dip in the Conference Board’s consumer confidence index to 93.3 in September from 94.5 in the prior month is not quite as weak as expected. In fact, sentiment remains well above the lows reached late last year, when the index bottomed at 84.9.”

However, BMO says that there are a number of troubling aspects to today’s report. “The present situation index deteriorated to its weakest level since May 1994. Households expect conditions to improve, but the “here and now” indicators have dipped significantly. Plans to buy all of the big-ticket items saw a big fall in the latest month, with particular weakness in appliances and autos. These consumer durable purchases had been a rare source of strength so far in 2002. The employment responses were also downbeat, suggesting that the jobless rate is poised to move higher in the months ahead. The key “jobs-hard-to-get” measure rose to 25.5%, while “jobs plentiful” fell to 15.9% – the gap between the two was the largest in eight years.”

“While the confidence report is no worse than expected, the readings would not take into account the latest slide in stocks, and are already consistent with cooler growth ahead,” says Nesbitt.

RBC Financial Group has a brighter take, noting, “Current financial market and geopolitical uncertainty may be overshadowing current consumer confidence, but, as these risks ebb, underlying conditions point to a strengthening economy — a situation consumers seem to sense.”