Aug. 29 (Bloomberg) -- Confidence among U.S. consumers fell this month to the lowest since November, rattled by expensive gasoline and a slowing housing market, a private survey showed.

The Conference Board's index of confidence dropped to 99.6 from 107.0 in July, the New York-based business group said. Measures of attitudes about the current economic environment and expectations for the next six months fell in August.

Americans are restraining their spending, which makes up 70 percent of the economy, as gasoline prices are kept aloft by violence in the Middle East and the housing slowdown makes it harder to take out home-equity loans. Today's survey showed a measure of consumers' inflation expectations for the next year rose, a warning signal for the Federal Reserve.

``Consumer confidence right now is a bit fragile,'' Anthony Chan, chief economist at JPMorgan Private Client Services in New York, said before the report. ``It's consistent with the strong likelihood that consumer spending will soften.''

Economists expected the index to fall to 102.7 from a previously reported 106.5 in July, according to the median of 67 forecasts in a Bloomberg News survey. Estimates for the index ranged from 99.0 to 106.5.

The Conference Board surveys 5,000 households, usually by the middle of each month. The survey was completed before a recent dip in prices of crude oil and gasoline.

The gauge of expectations for the next six months fell to 83.8 from 88.9. Optimism about consumers' present situation decreased to 123.4 from 134.2.

Americans' expectations for the inflation rate 12 months from now rose to 5.5 percent in August from 5.1 percent in July. It reached a high this year of 5.6 percent in May, the Conference Board's figures showed.

Labor Market

Consumers were less optimistic about the labor market six months from now, suggesting consumer spending may sag further after slowing in the second quarter.

The share of people expecting better employment opportunities in the next six months fell to 14 percent, from 14.3 percent. The proportion of people surveyed who expect their incomes to rise was 17.7 percent after 18.3 percent.

The share of consumers who said jobs are currently plentiful declined to 24.4 percent from 28.6 percent in July. The percentage who said jobs are hard to find increased to 21.1 percent from 19.6 percent in July.

Michigan Survey

A similar sentiment index compiled by the University of Michigan declined in August to its lowest since October. The university's preliminary reading of 78.7 will be followed by a final reading on Sept. 1.

Economists watch confidence gauges for clues to the strength of consumer spending. Even so, spending and confidence haven't been closely correlated this year, said Lynn Reaser, Boston-based chief economist at the Investment Strategy Group at Bank of America.

Consumers were less optimistic about the labor market six months from now, suggesting consumer spending may sag further after slowing in the second quarter.

Gasoline Prices

Rising prices at filling stations have been pinching Americans' pocketbooks all year. The $2.97 average price of a gallon of regular gasoline in August is unchanged from July and compares with $2.43 a year ago.

The labor market is giving consumers reason for optimism. The economy is on track to generate about 1.7 million new jobs this year, compared with 2 million last year, the second-best showing since 2000. The unemployment rate of 4.8 percent is close to a six-year low.

Home sales are falling after five years of record gains, slowing price gains and making it harder for owners to extract equity, a source of funding for consumer spending in recent years. Sales of previously owned homes fell in July to the lowest in more than two years, while sales of new homes fell to the second-lowest this year.

Growth Forecasts

Growth in consumer spending may slide to an annual rate of 2.7 percent by the fourth quarter from 4.8 percent in the January-to-March period, according to a Bloomberg survey of economists in the first week of August.

Gross domestic product will expand at an average annual rate of less than 2.8 percent in the second half of the year, compared with a 4.1 percent first-half pace, according to the survey.

The Federal Reserve kept its benchmark lending rate unchanged at its Aug. 8 meeting, citing a slowdown in the housing market and higher energy prices, after raising it 17 consecutive times since June 2004.

Lowe's Cos., the second-largest U.S. home-improvement retailer, last week reduced its profit forecast and said second- quarter sales at stores open at least a year rose at the slowest pace since 2003.

`Tumultuous Environment'

Chief Executive Officer Robert Niblock cited high energy costs and a ``tumultuous geo-political environment,'' including the war in Lebanon and the terror arrests in the United Kingdom.

``When the consumer is sitting there watching the daily news and being reminded of these things, I think it does create a little bit of a halo over them as far as discretionary spending,'' Niblock said in an interview. ``Do things now or wait until I see how they turn out?''

To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net

Last Updated: August 29, 2006 10:01 EDT