THE ECONOMY : Rate of Consumer Borrowing Up in May

Americans took out $3.6 billion more in consumer debt than they repaid in May as the pace of borrowing turned upward again, the government reported Friday.

The Federal Reserve Board said consumer credit in May rose at a seasonally adjusted annual rate of 6.2%, up from the 4.3% pace of the previous month. Still, it was a smaller rise than the gains of 6.6% in March and 9.5% in February.

Consumer spending, which is closely watched as a barometer of the economy’s health since it represents two-thirds of overall economic activity, had increased 8.5% during 1988.

Cynthia Latta, an economist with Data Resources Inc. in Lexington, Mass., said the report suggests consumer confidence.

“Consumers are still adding to their debt,” she said. “When they really get worried, they retrench and start paying down.”

Interest rates, she said, do not have as much influence on consumer credit as with other types of loans.

“Revolving credit rates hardly move at all and auto rates only a percent or so,” she said. This type of consumer “is more concerned with the amount of the monthly payments, not the amount of interest.”

Until spring, interest rates had been rising as the Fed tightened its grip on credit in its attempt to stem inflation. Since early last month however, the central bank has loosened its grip and interest rates have declined somewhat.

Leading the overall consumer credit increase in May was the category of debt that includes credit cards. It rose $1.94 billion, a 12.6% annual rate of growth, after a 10.9% increase in April.

Auto loans were up $1.02 billion May, a 4.2% increase on an annual basis, compared to a 2.8% rise in April, the Fed reported. Auto loans had gone up only 0.3% in March.

Bank and credit union loans not secured by real estate rose by $659 million in May, a 4% annual rate of advance, up from 2% in April.

Borrowing for mobile homes fell for the fourth consecutive month, declining by $15 million at an annual rate of 0.7%. That followed drops of 8.7% in April and 84.2% in March. The steep March drop occurred largely because of a shift in debt from the mobile home category into that of bank loans.

The various changes left total consumer debt in May at a seasonally adjusted $697.26 billion.