WASHINGTON, United States (AP) — US consumer borrowing rose by a solid 3.6 per cent in July, the second monthly gain after the novel coronavrius pandemic had sent borrowing down sharply in the previous three months.

The Federal Reserve reported yesterday that the 3.6 per cent increase in July, which represented a US$12.2-billion advance, followed a 3.3 per cent rise in June and sharp declines in March, April and May.

The strength in July came from a US$12.5-billion rise in the category that includes auto loans and student loans. The category that covers credit cards fell by US$293 million, the fifth-straight month that the credit card category has declined.

Nancy Vanden Houten, senior economist at Oxford Economics, said she expects a modest rebound in the credit card category in coming months. But she said, “a slow recovery in consumer spending and tight lending standards will limit the upside” for credit card gains.

Consumer borrowing is closely watched for signals it can send about consumers’ willingness to take on more debt to support their spending. Consumer spending accounts for 70 per cent of US economic activity.

The overall economy, as measured by the gross domestic product, plunged at a record-breaking, annual rate of 31.7 per cent in the April-June quarter as the novel coronavirus shut down wide swaths of the US economy, closing businesses and pushing millions out of work. Consumer spending fell at a record rate of 34.1 per cent in the second quarter.

The economy has shown signs of a rebound in recent months and many economists believe the gross domestic product (GDP) will rise at an annual rate of 25 per cent or better in the current July-September quarter.