WASHINGTON -- Credit-card borrowing and other kinds of consumer debt declined for the first time in 10 months in September, reflecting in large part sagging auto sales.
The Federal Reserve reported total borrowing fell at an annual rate of $59.4 million in September after having posted sizable increases of $7.91 billion in August, $9.96 billion in July, and $15.04 billion in June.
The three months before September had been driven by huge gains in auto loans as consumers responded to sales incentives. However, auto sales faltered in September as sales of sport utility vehicles declined under the impact of soaring gasoline prices.
The Fed report showed consumer credit declined at an annual rate of 0.03 percent in September after having risen at a 4.4 percent rate in August. It was the first decline since a drop of 0.9 percent in November 2004.
The weakness in September came from a 2.8 percent drop at an annual rate in nonrevolving loans, the category that includes auto loans. This category had shown a 4.6 percent increase in August and an even larger 9.3 percent surge in July.
The category of credit cards and other types of revolving debt showed a 4.7 increase in September, the biggest gain in three months. Analysts said this increase reflected in part heavier use of credit cards to pay for gasoline.
The slight decline left total consumer credit at $2.16 trillion in September, close to a record high.
The Fed report on consumer credit does not includes loans such as mortgages that are secured by real estate.
Separately, the Fed said most US banks reported weaker demand for mortgages in the August-October period as compared to the previous three months.
The Fed said demand for mortgages to purchase homes had weakened in the past three months after having risen in the previous survey in July with almost one-fourth of domestic banks surveyed reporting declines in mortgage demand.