The U.S. Conference Board’s Consumer Confidence Index, which had been on the rise since December, lost ground in February.

The index now stands at 94.1 (1985=100), down from 97.8 in January. The Present Situation Index declined from 98.1 to 94.8. The Expectations Index fell from 97.6 to 93.6.

“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.”

RBC economists note that the fall was driven by a deterioration in both the current conditions index and the expectations index. “Consumer confidence has been an important offset to slumping business confidence in the current down turn and will be a key factor to the sustainability of the coming recovery. In the months ahead, as the U.S. recovery starts to gather steam, job losses will give way to job gains, elevating consumer confidence and putting consumer spending on a firmer footing,” it predicts.

BMO Nesbitt Burns suggests that the financial scandals swirling through the press are also to blame. “More detailed statistics from the overall report show that, after thawing for a month, employment conditions turned cooler again. The closely watched “jobs hard to get” reading rose to 22.8, the highest level this cycle. Relative to last month, it is clear from various survey results that households are more cautious about the economic and financial outlook, despite a steady stream of better economic data.”

“Today’s consumer confidence report is not a red flag for companies serving the consumer sector,” BMO concludes. “Broadly, it has few equity-market implications. We read the trend in confidence as indicative of recovery. The February drop was minor and can be ignored in the context of all the strong figures seen lately.”

RBC also notes that weekly U.S. chain store retail sales were reported down 0.4% in the week ended February 23 versus the week before. “Details of the report revealed that, while week-to-week sales were soft, most retailers’ sentiments were above expectations.”

Consumers’ assessment of ongoing business conditions was less favorable in February. Those rating conditions as “good” declined from 18.2% to 17.2%. Consumers rating current business conditions as “bad” rose marginally from 22.4% to 22.9%. Those reporting jobs were plentiful fell from 18.4% to 17.8%. Those claiming jobs were “hard to get” edged up from 22.5% to 22.8%.

Consumers’ outlook for the next six months was less optimistic. Those expecting an improvement in business conditions decreased from 24.9% to 22%. Those anticipating conditions to worsen rose from 9.8% to 11.3%.

The employment outlook was also less positive. Currently, 18.4% of consumers expect more jobs to become available in the next six months, down from 18.9% in January. Those expecting fewer jobs to become available increased from 18.0% to 19.3%. As for income expectations, fewer consumers anticipate their paychecks to rise over the next six months — 20.1% in January, compared to 19.9% in February.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by NFO WorldGroup, a member of The Interpublic Group of Cos.