Credit Buying Surges Despite Higher Interest

U.S. consumers boosted their buying on credit in May at the strongest clip in four months, despite rising interest rates, Federal Reserve statistics showed. Total consumer installment credit surged $11.8 billion, at an annual rate of 9.8%, after a revised $8.8-billion increase in April. The gain in May was the strongest since a $15.73-billion rise in January and exceeded analyst expectations of an $8-billion increase. Revolving, or credit-card credit, moderated in May to an increase of $4.6 billion at an 8.9% rate after a $6.5-billion increase in April. But nonrevolving credit, a category that includes new-car loans, increased $7.1 billion at a 10.5% rate, triple the $2.3-billion rise posted in April. The Fed watches the monthly consumer credit report closely as a gauge of consumer spending, which fuels two-thirds of national economic activity. But it is an imperfect measure, since it does not include home-equity loans that many consumers use to finance costly purchases such as new cars. Analysts say there are signs that consumer spending is moderating and that the full impact of the rate increases probably has not been felt.