Consumer morale dips, worries over growth

The University of Michigan's preliminary reading on consumer sentiment in July was 83.0, down from June's final 84.9 reading, said sources who saw the subscription-only report. The median forecast of Wall Street economists polled by Reuters was for a reading of 85.5.

This data, coupled with news from the Commerce Department that June retail sales fell 0.1 percent - the first decline since February - raised concerns of a economic slowdown.

Economists had forecast retail sales to rise 0.4 percent. Consumer spending accounts for about two-thirds of U.S. economic activity, but in recent years confidence measures have been a weak guide to actual spending.

"Given the news of late and with what oil prices have been doing you might have expected it to be worse and there might be some relief it isn't. Expectations might be even weaker in the next report," said Jim Paulsen, chief investment strategist, Wells Capital Management, Minneapolis.

"It supports the ongoing trend for the Fed of one and done or a pause."

The Fed has raised rates in 17 consecutive quarter-percentage-point steps to 5.25 percent and has left the door open as to its moves in the months ahead, depending on the outlook for growth and inflation.

The University of Michigan survey's index of current conditions slipped to 100.8 in July from 105.0 in June, while consumer expectations declined to 71.6 from 72.0 in June.

Consumers' expectations in July were for more muted inflation ahead, the report said, according to the sources.

The University of Michigan's preliminary July reading on one-year U.S. inflation expectations was 3.1 percent, down from 3.3 percent in June.