Consumers stepped up their borrowing in July by the largest amount since the beginning of the year, the Federal Reserve reported yesterday.

Consumer credit increased at a seasonally adjusted annual rate of 6.4 percent in July, or by $10.9 billion, from the previous month. That marked the biggest gain since January, when consumer borrowing surged at a 15.8 percent pace.

July's increase pushed total consumer credit outstanding to a record $2.04 trillion.

The Fed's report includes credit card debt and loans for such things as boats, cars and mobile homes. It does not include real estate loans, such as home mortgages or home-equity loans.

The figures for July represented a big pickup in borrowing from June, when consumer credit increased at a 2.6 percent annual rate.

"We knew there was an improvement in consumer spending in July, but the question is can we sustain that momentum?" said Carl Tannenbaum, chief economist at LaSalle Bank.

Early readings on retail sales in August have been mixed, he said. Economists watch consumers' behavior closely because their spending accounts for roughly two-thirds of all economic activity in the United States.

Demand for revolving credit, such as credit cards, led the way in July. Such credit jumped at a rate of 9 percent, or $5.6 billion, in July from the previous month. That compared with a 0.2 percent rate of decline in June.

Demand for nonrevolving credit, which includes loans for cars and education, rose at a 5 percent rate in July, or $5.4 billion. That followed a 4.1 percent growth rate in June, an increase of $4.4 billion.

Retail sales rebounded in July after a dismal June. Car sales were helped out by incentives, and other merchants discounted more to lure shoppers.