NEW YORK — Consumer confidence declined for the second straight month, but it’s unclear whether the weakness stemmed from a lackluster employment picture or a lack of wage growth.

This story first appeared in the September 29, 2004 issue of WWD. Subscribe Today.

The Conference Board’s Consumer Confidence Index fell to 96.8 for September from 98.7 in August while the Present Situation Index fell to 95.5 from 100.7 and the Expectations Index rose slightly to 97.6 from 97.3.

The Consumer Confidence Index is the composite of both the Present Situation and Expectations indices.

The board said the decline in the index reflected a consumer perception that the job situation is less favorable from a month ago. Consumers said they didn’t think jobs were as plentiful, and were harder to get. Looking ahead, however, their expectations, or outlook for the next six months, remained relatively unchanged. Those surveyed who anticipated conditions to worsen increased to 9.4 percent from 8.8 percent, while those expecting business conditions to improve rose to 21.4 percent from 20.2 percent in August.

Economists and analysts keep tabs on the index because it can provide a hint of whether there might be a slowdown in overall economic activity.

Maury Harris, economist at UBS, said in a research note that the “expectations component has historically proven a much better indicator of the trend in consumer spending growth than the overall index.” In comparison, the present situation component is more a measure of activity, such as the employment rate, than one of growth.

“Encouragingly, the expectations index rose slightly, but it is still high enough to be consistent with a trend in real consumption growth of as much as 4 percent at an annual rate,” Harris wrote.

September’s results were described as “bearish” by Richard Hastings, retail analyst for Bernard Sands, who said it signals a turn because it’s the third consecutive month the outlook portion of the index fell below the present sentiment component.

“The turning signals typically are negative, and the causes are easy to find. Households are suffering not from a lack of jobs, but from a lack of wage growth amidst constant inflationary pressures and volatile stock market performance. Already there are signs of weaker spending at retail on clothing and accessories, especially in the moderate market, and this will surely spread to some other categories,” Hastings said.

This winter, Hastings expects gas and heating oil inflation to cut into discretionary spending.

— V.M.Y.