Consumer borrowing in the US surged again in May as Americans took out more loans to buy cars.

The $19.6 billion increase in credit followed a revised $26.1 billion gain in April, Federal Reserve figures showed yesterday in Washington.

Non-revolving lending, which includes auto and school loans, advanced by the most in a year. Stronger employment and stock market gains are giving consumers the confidence to take on more debt.

The figures coincide with robust auto sales and greater demand for furniture and appliances tied to the real estate recovery, indicating the US economy is rebounding from a first-quarter slump.

“When the housing markets pick up strongly that does tend to boost purchases of big-ticket items such as furniture, which are often bought on credit,” David Sloan, senior economist at 4Cast in New York, said before the report.

Broad-based strength

A pick up in residential real estate was “crucial to get more broad-based strength in consumer credit”.

The median forecast of 33 economists called for a $20 billion increase. Estimates ranged from $12 billion to $26.9 billion after a previously reported $26.1 billion advance a month earlier.

The April gain was the biggest in comparable data going back to December 2010.

The report does not track mortgages, home-equity lines of credit or other real estate-backed debt.

Revolving debt, including credit card balances, rose $1.79 billion in May following an $8.85 billion advance in April . – (Bloomberg)