WASHINGTON – Consumers increased their borrowing in June but at the slowest pace in 17 months as auto and student loans registered the slowest growth in nearly five years.
The Federal Reserve said Friday that total borrowing rose by $12.3 billion in June, down sharply from an increase of $17.9 billion in May. That was the smallest monthly gain since January 2015.
The slowdown in borrowing came from a big decrease in the growth of auto and student loans, which rose by just $4.6 billion in June, the weakest monthly performance since this loan category declined in August 2011.
The category that covers credit cards rose by $7.7 billion in June, up from an increase of $1.8 billion in May and the largest monthly gain in this category since March.
Much of the slowdown in borrowing reflects a slowing in auto sales which have hit a plateau after six straight years of growth. Last year, auto sales climbed to a record of 17.5 million new vehicles. In the first half of the year, auto sales were up 1.5 percent, compared to a gain of 4 percent for the first half of 2015.
The increase in overall borrowing pushed total credit to a fresh record of $3.63 trillion. Many economists expect total borrowing will keep rising at a solid pace as consumers keep spending, bolstered by strong job growth.
In a separate report Friday, the government said that employers added 255,000 jobs in July while the unemployment rate held steady at 4.9 percent.
The overall economy grew at a disappointing rate of 1.2 percent in the April-June quarter following an even weaker 0.8 percent growth rate in the first quarter. But economists expect growth will pick up in the second half of the year to a more respectable pace around 2.5 percent.
The Fed's consumer borrowing report does not cover home mortgages or other loans, such as home equity loans, that are secured by real estate.