The Consumer Confidence Index fell to 96.8 from a revised reading of 98.7 in August, according to The Conference Board. Analysts had expected a reading of 99.5.

"Soft labor market conditions have clearly taken a toll on consumer confidence," said Lynn Franco, director of the organization's Consumer Research Center. "Still, expectations for the next six months are virtually unchanged from August."

Economists closely track consumers' outlook about the economy and employment because consumer spending accounts for two-thirds of all U.S. economic activity.

The confidence index, which was as high as 144.7 in May 2000 when the job market was flourishing, has been volatile since the economy emerged from recession in November 2001. It fell to 64.4 in March 2003 after the U.S.-led invasion of Iraq, but then began what had been a gradual but inconsistent rise as the job market recovery has remained tenuous, according to Franco. It was 105.7 in July.

The Present Situation Index, one component of the consumer confidence reading, fell to 95.5 from 100.7 in August. The Expectations Index, which measures consumers' outlook over the next six months, edged up to 97.6 from 97.3 last month.

The Conference Board's indexes are derived from responses received through Sept. 20 to a survey mailed to 5,000 households in a consumer research panel. The figures released Tuesday include responses from at least 2,500 households. The figures for August were revised after all the surveys for that month were tabulated.

The period coincided with the volatile rise of oil prices, which topped $50 per barrel Tuesday, and the recent hurricanes that devastated Florida. The hurricanes did not have an affect on the confidence numbers, but could erode consumer sentiment later as the economic impact is digested in the region, Franco said.

And while rising oil prices do not directly hurt consumer confidence, the prices erode corporate profits, which makes business become more conservative in hiring, said Mark Vitner, senior economist at Wachovia Corp. in Charlotte, N.C.

Still, while Vitner said that the consumer confidence readings in September were "disappointing, they were not that weak." He noted that the main index is still close to a reading of 100, which is the benchmark for "normal economic times."