07/08/2015 03:02 EDT | Updated 07/08/2016 05:59 EDT

Auto, student loans send US consumer borrowing to record high in May

WASHINGTON - U.S. consumer borrowing climbed to a record high in May, propelled by a surge in auto and student loans.

Consumer borrowing increased $16.1 billion following a gain of $21.4 billion in April, the Federal Reserve reported Wednesday. The April increase had been the strongest monthly increase since July 2014.

The gains pushed total borrowing to a fresh record of $3.4 trillion.

In May, borrowing in the category that includes autos and student loans rose by $14.5 billion. Borrowing in the category that covers credit cards rose by $1.6 billion after an increase of $8.5 billion in April.

The overall increase put total credit up 6.5 per cent over the past 12 months. The rise is led by a 7.8 per cent jump in borrowing in the auto and student loan category and a more moderate 3.2 per cent rise in borrowing in credit cards.

Economists believe that solid job gains should translate into more borrowing and spending that will help lift economic growth in the second half of this year.

The overall economy, as measured by the gross domestic product, shrank at an annual rate of 0.2 per cent in the January-March quarter. Economists have forecast that growth rebounded in the April-June quarter to around 2.5 per cent and should strengthen further in the second half of this year.

The Fed's monthly report on credit does not cover home mortgages or other loans secured by real estate such as home equity loans.