Consumer Credit in U.S. Increases at Slowest Pace Since November

Consumer borrowing in the U.S. increased in August at the slowest pace in nine months as credit-card use declined.

The $13.5 billion gain in credit followed a $21.6 billion advance in July that was smaller than previously estimated, a report from the Federal Reserve in Washington showed today. Non-revolving loans, which include borrowing for autos and college tuition, climbed $13.7 billion, the smallest increase since January.

Households wary of taking on more debt are being deliberate in using their credit cards for purchases as wage gains remain limited. At the same time, a stronger job market and cheap borrowing costs are giving households the wherewithal to buy big-ticket items such as motor vehicles.

The August gain in consumer borrowing was smaller than the $20 billion median forecast of 36 economists in a Bloomberg survey. Estimates ranged from increases of $15 billion to $30 billion. The report doesn’t track mortgages, home-equity lines of credit and other debt secured by real estate.

Revolving credit, which includes credit-card balances, fell $208 million, the first decline in six months, after a $5.4 billion July increase, today’s Fed figures showed.

The August gain in non-revolving credit followed a $16.2 billion increase in the prior month. Federal government lending to consumers, made up mostly of educational loans, increased $19.8 billion in August from the previous month before adjusting for seasonal variations.

Auto sales jumped in August to a 17.5 million annualized rate, the strongest since January 2006, according to data from Ward’s Automotive Group. The pace cooled last month to 16.3 million, capping the best quarter for the industry in more than eight years.

Faster employment is providing Americans with the means to keep spending. Employers added 248,000 workers in September, and the unemployment rate fell to a six-year low of 5.9 percent, a report from the Labor Department showed last week. At the same time, wages climbed 2 percent from September 2013, the smallest year-over-year gain in three months.

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