[ForexNews]

Consumer confidence dropped to 47.7 in October from 53.4 in September, below consensus (53.5) expectations. The weakness in the report was primarily due to a large decline in the expectations component to 65.7 from 73.7. The present situation index also continued to weigh on the headline; today's reading of 20.7 fell below this cycle's March low of 21.9. Despite falling jobless claims, the labor differential still worsened in October to -46.2 (last: -43.4). Buying plans overall were relatively stagnant this month, inching lower across most categories. Although today's report was consistent with the recent fall in the University of Michigan's index of consumer sentiment, there seems no obvious explanation for the declines. Perhaps respondents felt discouraged by the slow pace of improvement in the labor market. Confidence is still substantially higher than the trough of 26.9 in March, but quite depressed compared with the pre-recessionary peak of 111.9. Market expects the headline index to rise over the next several months as consumers experience more tangible evidence of economic recovery in both business conditions and employment.