Consumer borrowing in US rises by US$8.9 billion

US consumers took on more debt in April than in any month since November, as borrowing helps underpin spending and the economic recovery.

Outstanding debt on credit cards and other non-mortgage loans increased by US$8.9 billion in April after a March increase of US$6.8 billion that was larger than previously reported, the Federal Reserve said. Credit-card use surged.

Spending at retailers including JC Penney Co and at General Motors Corp auto dealers rose more in April than at any time in the prior six months. Consumer spending is important because it accounts for two-thirds of the economy.

Consumers "are doing their part to keep the economy going," Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd in New York, said before the report. "The problem is they're relying on credit and eventually they're going to have to pay the piper."

Analysts had expected consumer credit to rise by US$7 billion in April after a previously reported gain of US$4.6 billion in March. Economists watch the report to gauge consumers' debt management and to determine whether they will be in a position to spend in coming months.

Non-revolving loans, which include borrowing for automobiles, rose by US$4.8 billion for the month after rising by US$4.4 billion in March. Revolving loans, which include credit-card debt, increased by US$4.1 billion, the biggest increase since November, after rising by US$2.4 billion in March.

Retail sales rose 1.2 percent in April, the Commerce Department said last month. Sales at motor vehicle and auto parts dealers rose 1.9 percent in April, the biggest gain since October of last year, after falling 0.8 percent.

Cars and light trucks sold at a 17.3 million annual rate in April, up from a 16.4 million pace in March and the strongest since November, according to industry figures. General Motors Corp reported a 13 percent gain.