WASHINGTON (Reuters) - U.S. consumer credit rose more than expected in February to record its fifth straight monthly increase as consumers bought motor vehicles, indicating the economic recovery remains intact.
The Federal Reserve said on Thursday total outstanding credit, which covers everything from car loans to credit cards, increased by $7.62 billion after a $4.45 billion rise in January. That was well above economists’ expectations for a $4.70 billion gain.
Overall credit was buoyed by a $10.33 billion jump in nonrevolving credit -- which includes closed-end loans for big-ticket items such as cars, boats, college education and vacations. Nonrevolving credit rose $8.35 billion in January.
“This is consistent with the strength seen in auto sales over the past few months as auto-related loans make up a large portion of nonrevolving debt,” said Theresa Chen, an economist at Barclays Capital in New York.
“The persistent increase in headline consumer credit is a positive development, consistent with the broader economic recovery.”
The increase in nonrevolving credit was the largest since October and marked the seventh straight month of increases.
Consumer spending got off to a slow start early this year, held back by bad weather and rising gasoline prices. Consumer spending accounts for about 70 percent of U.S. economic activity and was one of the major drivers of growth in the fourth quarter.
Robust auto sales, despite rising gasoline prices, are expected to support consumer spending in the first quarter. Auto sales rose a hefty 27 percent in February.
Even though consumers are buying cars, they continue to pay their credit card debt.
So-called revolving, or credit-card credit, fell $2.71 billion in February after dropping $3.91 billion the prior month, the Fed data showed.
Reporting by Lucia Mutikani; Editing by James Dalgleish