Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, August 8, 1995                   TAG: 9508080095
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: Bloomberg Business News
DATELINE: WASHINGTON                                 LENGTH: Medium

CREDIT CARD USE REMAINS STRONG

Consumer installment credit increased $9.62 billion for the month, the smallest gain since February, when borrowing increased by $4.71 billion, Federal Reserve figures showed.

Analysts said the surge in borrowing in part reflects the more widespread acceptance of credit cards and incentive programs offered by issuers, and isn't a sign consumers are becoming tapped out.

``Consumer credit won't be a hindrance to further growth in consumer spending'' during the second half, said Bill Sharp, an economist with Smith Barney in New York, in an interview before the release of the report. ``We've still got a ways to go'' before borrowing slows significantly, he said.

Before today's report, Wall Street analysts anticipated a $10.5 billion increase in consumer credit for June, according to a survey conducted by Bloomberg Business News.

Analysts closely follow the Fed's credit statistics because consumer spending accounts for two-thirds of U.S. economic activity. In June, spending rose 0.4 percent, the Commerce Department said.

Over the past six months, ``if you look at the total increase in consumer spending, more than 55 percent was financed by credit cards,'' said Dan Friel, a senior economist at NationsBanc Capital Markets Inc. in Charlotte, N.C. ``That doesn't look like it's slowing significantly,'' he said.

The report showed that auto borrowing rose $2.979 billion in June while other borrowing, such as mobile home loans, increased $604 million, the Fed said.

The report doesn't cover home equity lines of credit. The consumer credit numbers tend to be erratic on a month-to-month basis, and analysts said the statistics should be viewed cautiously over the short haul.