US consumer debt in record fall

US consumers are focusing on paying off debt rather than spending

US consumers slashed their borrowing by a record amount in July as rising job losses and uncertainty about an economic recovery hit home.

Consumer credit fell by $21.6bn (£13.1bn) compared with June, figures from the Federal Reserve showed, massively more than analysts expected.

June's figure was also revised downwards, to $15.5bn from $10.3bn.

Economists say that US households are focusing on cutting back debt levels during the recession.

Last week, official figures showed that US employers cut 216,000 jobs in August, pushing the unemployment rate up to 9.7%, a 26-year high.

But there have been signs that the US economy is recovering.

Last week, figures showed that US manufacturing grew in August for the first time in 19 months and that home sales hit a two-year high in July.