Nov. 7 (Bloomberg) -- Borrowing by U.S. consumers rose in September, reversing the biggest drop on record, according to statistics from the Federal Reserve.

Consumer credit rose by $6.9 billion, or 3.2 percent at an annual rate, to $2.59 trillion, the Fed said today in Washington. In August, credit fell by $6.3 billion, the most since records began in 1943.

Looking beyond the month-to-month volatility, the figures have started to reflect the freeze in lending that is forcing consumers and businesses to retrench. The loss of 1.2 million jobs this year is darkening the outlook, underscoring forecasts that the economy is heading toward the worst slump in decades.

``Credit is hard to get and is going to get even harder to obtain in the future,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York.

Economists forecast consumer credit would be unchanged in September, according to the median of 32 estimates in a Bloomberg News survey. Borrowing is up by an average of $2.7 billion a month since July, compared with a gain of $9.8 billion per month from January through June.

The Fed previously estimated a $7.9 billion drop in August. The report doesn't cover borrowing secured by real estate.

Revolving debt, such as credit cards, rose by $954 million in September. Non-revolving debt, including auto loans, increased by $5.9 billion, according to the Fed's statistics.

Less Lending

In a report issued Nov. 3, the Fed said a record share of U.S. banks made it harder to get loans over the past three months. The quarterly Senior Loan Officer Survey said: ``Large fractions of domestic banks again reported tightening standards on both credit card and other consumer loans.''

``It is doubtful that the credit data are going to improve any time soon,'' said Richard Yamarone, director of economic research at Argus Research Corp. in New York. ``Job loss is on the rise and banks aren't exhibiting any desire to lend.''

Consumer spending dropped in September, capping the weakest quarter in three decades. The 0.3 percent decrease was the biggest in four years, the Commerce Department said Oct. 31.

Auto sales, meantime, tumbled 27 percent in September from the same month last year as credit dried up, according to auto industry statistics. They dropped 32 percent last month.

Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more than 15 years, according to data from Wachovia Corp. Investors shunned the debt amid concern defaults would rise as the jobless rate climbed.

To contact the reporter on this story: Vincent Del Giudice in Washington vdelgiudice@bloomberg.net

Last Updated: November 7, 2008 15:44 EST