U.S. Economy: Consumers, Business Are Less Optimistic (Chandra & Willis)

  By Shobhana Chandra and Bob Willis

  Oct. 31 (Bloomberg) -- American consumers and companies were less optimistic in October, sharpening questions about the economy's strength after the expansion slowed last quarter.

  The Conference Board's index of consumer sentiment unexpectedly fell to 105.4 from a revised September reading that was higher than originally reported. The National Association of Purchasing Management-Chicago said its business barometer fell to 53.5, the lowest since August 2005 and less than economists forecast. A reading above 50 signals expansion.

  Bonds jumped and the dollar weakened as traders speculated that consumer spending may slacken, removing one of the sources of economic growth last quarter. The figures, released three days before the Labor Department's monthly jobs report, showed more people anticipate hiring will ease in coming months.

  ``The drop in consumer confidence isn't big enough to imply spending is going to go away, but it does suggest the joy of lower gasoline prices is dissipating,'' said Christopher Low, chief economist at FTN Financial in New York.

  Economists forecast the confidence index would rise to 108, the median of 59 forecasts in a Bloomberg News survey, from an originally reported 104.5. The Chicago measure was forecast to decline to 58.

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