Consumer borrowing picked up in July. The total outstanding consumer credit, excluding real estate secured loans, increased to $3.238 trillion at a seasonally adjusted annual rate of 9.7% in July from the previous month according to the Federal Reserve. The translation comes to a gain of $26.0 billion, much higher than the $17.3 billion which Bloomberg had as the consensus target. June posted growth of 7.1% and May posted growth of 7.3%.

Outstanding non-revolving credit rose 10.6% to $2.357 trillion. As a reminder, consumer spending makes up more than two-thirds of the U.S. economic output. Durable goods spending in the second quarter boosted economic growth, and more consumption in the second half of the year would yield stronger overall growth.

Despite the increase in July’s credit-card borrowing, household spending did not accompany it. The Commerce Department estimated that overall consumer spending fell by 0.1% in July. Retail and restaurant sales remained flat from June. There has been a cautious sentiment since the recession that consumers are less willing to assume credit-card debt to finance household spending. There has been modest growth in outstanding revolving credit earlier in the year excluding the spike in April; July posted a growth of 7.4% against 2.5% in June and 3.3% in May.

Monthly reports on consumer credit almost never move the markets on the announcement of the data. What the data does indicate though is that more borrowing demand is there.

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