The University of Michigan's consumer sentiment index fell to 90.2 from 90.9 in July, according to market sources quoted by . Economists, on average, expected a reading of 91. While conceding that the reading came as a surprise, analysts said that it could be explained by the ongoing weakness in employment. In the university's report, the "current conditions" component of the index, which measures how consumers feel about their present situation, rose to 100.5 from 94.7. The "expectations" component of the index, which measures how consumers think the economy will perform in the next 12 months, was flat at 83.6, matching July's level.
Though consumer confidence has been buffeted by a recession and terror attacks in 2001, corporate scandals in 2002, war in 2003, a bull market in stocks and lingering labour-market weakness, consumers have kept spending. Their spending has been supported in large part by super-low interest rates, which have spurred a boom in mortgage refinancing and demand for homes. Interest rates, including long-term mortgage rates, have risen recently, however, putting a damper on the housing market. //www.fxcentre.com