Consumers’ Borrowing Slows in June

Americans’ rate of borrowing went up in June, reflecting heavy credit card use, but the pace wasn’t nearly as exuberant as it had been in May.

Consumers’ credit outstanding, excluding mortgage debt, advanced at a 2.5% annual rate in June, to a seasonally adjusted $1.35 trillion, the Federal Reserve said Friday.

All told, consumers borrowed $2.8 billion more in June than during the month before, well below many analysts’ expectations.

The increase in June’s rate follows a hefty 10.5% gain in May--the largest increase since January. In April, consumer borrowing rose 0.3%, less than the Fed previously estimated.

June’s increase was led by demand for revolving credit--primarily credit card revolving loans, which rose at an annual rate of 8.6%. That was the largest increase since a 9.3% rise in January. In May, revolving credit rose at a 4.2% annualized rate.

However, demand for nonrevolving loans actually fell 2% in June. That category includes loans for autos, mobile homes, boats, trailers, education and vacations. In May, nonrevolving credit rose a sharp 15.3%, the biggest increase since January, when it rose at an annual rate of 17.5%.

The slowdown in consumer borrowing comes as Americans pulled back from their feverish spending pace in the second quarter of this year. In the April-June period, consumer spending rose 4%, compared with the torrid 6.7% increase in the first three months of the year.