Consumer Credit Up 2.4% in May

Americans increased their borrowing at a 2.4% annual rate in May, significantly slower than in April, as a slowdown in the growth of auto loans offset a big jump in credit card borrowing, the Federal Reserve reported Monday.

Meanwhile, inventories at U.S. wholesalers grew a stronger-than-expected 0.8% in May as an increase in higher-priced stocks of oil offset leaner automotive inventories, another government report indicated Monday.

The Fed said May’s 2.4% increase in consumer credit followed a huge 5.2% rise in April. The slowdown occurred because of weakness in auto loans, which offset the jump in credit card borrowing.

Economists believe that the economy is slowing to a more moderate pace as consumers, faced with soaring gasoline prices, cut back their spending in other areas.

For May, nonrevolving loans -- the category that includes auto loans -- fell at an annual rate of 2%, reflecting the weakness in sales during the month. It was the biggest decline in this category since a 5.9% drop in October.

Borrowing on credit cards and other categories of revolving debt shot up at an annual rate of 9.9% in May, the biggest surge in this category since a 13.5% increase in October 2004.

The total amount of borrowing rose at an annual rate of $4.4 billion in May to a total of $2.17 trillion. That compared with an increase of $9.34 billion in April and was slightly ahead of the $3.2-billion increase in borrowing that economists had been forecasting.

It marked the seventh consecutive month that consumer borrowing has increased.

As for wholesale inventories, the Commerce Department said the rise was outpaced by a 1.6% climb in wholesale sales in May. This cut the inventories-to-sales ratio, a measure of how quickly goods would be depleted at the current sales pace, to a record low of 1.15 months, down from 1.16 months in April.

Economists had forecast a 0.5% inventory increase after April’s previously reported 0.9% rise. The Commerce Department revised the April inventory gain upward to 1.3%, and the April wholesale sales rise was revised to 1.5% from a previously reported 1.3% advance.