The private research group said its consumer confidence index fell to 105.4 in October from a revised 105.9 in September.

Economists were expecting an increase to about 107.9 from the previously reported 104.5.

The index suggests "a moderate pace of economic growth and more of the same for the first few months of 2007, said Lynn Franco, head of the research group's consumer research center.

"October's dip in confidence was prompted by consumers' mixed assessment of present-day business conditions and a less favorable view of the job market," she said.

The percentage of consumers saying jobs are plentiful declined to 25.8% from 26.2%, while the share saying jobs are hard to get rose to 22% from 20.9%.

In a separate report, the Labor Department said employment costs rose 1% in the third quarter, the most in a year and a half. Compensation costs were rising faster than inflation for the first time in two years. See full story.

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The tepid forecast follows a below-forecast third-quarter gross-domestic-product report on Friday, which also cast doubt on whether the recent stock-market surge is out of line with the health of the economy.

The Dow Jones Industrial Average fell 10 points to 12,079.

The Nasdaq Composite Index was off 3 points at 2,348 while the S&P 500 Index dropped 1 point to 1,376.

On Friday stocks closed lower on the day, but higher on the week, after the weaker-than-expected third-quarter economic growth report caused investors to break from a recent rally. The technology sector was hard hit by a Goldman Sachs note saying demand for computer motherboards "is falling off a cliff."

Prior to Friday, the Dow Jones industrials had been on a tear, setting multiple intraday and closing highs in October.

"It looks like we will see a bit of follow-through from Friday's losses," said Art Hogan, chief market strategist at Jefferies & Co. "Overall, the gains have been so strong that once the profit-taking starts, it is likely to be a two-day affair."

The concerns about the economy were soothed slightly by news that core consumer-price inflation retreated slightly more than forecast in September. See full story.

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