Architects' slump an 'alarm bell' for US construction

* May billings index 45.8, down 2.6 points

* Index in contraction territory for 2nd straight month

* May project inquiries index 54, down 0.4 point

NEW YORK, June 20 (Reuters) - An index of architects' billings that is considered a barometer of U.S. construction activity fell to its lowest level in more than two years in May and marked a second straight month of contraction.

The Architecture Billings Index fell 2.6 points to 45.8 in May, its lowest reading since February 2010, the American Institute of Architects (AIA) said on Wednesday. It was the sixth straight monthly decline in the index and the second straight month that it fell below 50, the level that indicates contracting demand.

The billings index, which measures demand for architects' services, helps predict construction activity nine to 12 months ahead.

A separate measure of project inquiries dipped 0.4 point to 54 last month, the lowest in a year and the third consecutive monthly decline.

"Given the ongoing uncertainly in the economic outlook, particularly the weak job growth numbers in recent months, this should be an alarm bell going off for the design and construction industry," said AIA Chief Economist Kermit Baker.

The monthly billings index is widely tracked by industrial companies and their investors as a hint of future demand for machinery and components used to erect buildings. Most diversified manufacturers derive a portion of sales from nonresidential construction such as office buildings, and retail and warehouse space.

Companies exposed to the sector include Honeywell International Inc, Tyco International Ltd, Ingersoll Rand Plc, Cummins Inc, Eaton Corp , Manitowoc Co Inc, Caterpillar Inc, Deere & Co and Terex Corp.

European companies such as Siemens AG, Schneider Electric SA and lock maker Assa Abloy are also active in the sector.