US architecture billings index rose in August-AIA

* August ABI up 0.3 pts to 48.2, for 3rd consecutive gain

* New project inquiries up 1.5 pts to 54.6

* Small renovations dominate; cancellations persist

NEW YORK, Sept 22 (Reuters) - A closely watched indicator of future U.S. construction spending rose modestly in August, its third consecutive monthly increase, but it remained at a level that indicates falling demand, an architects’ trade group said on Wednesday.

The architecture billings index was up slightly to 48.2 to its highest since April, according to the American Institute of Architects (AIA).

The AIA’S separate, less predictive, project inquiries index rose 1.5 points to 54.6 in August. Readings above 50 indicate expansion; those below 50 are a sign of declining demand.

Project inquiries typically produce a higher reading than actual billings because multiple architecture firms bid on the same projects. Many inquiries come to naught. Project cancellations continue to be the main roadblock to recovery for the construction sector, the group said. Meanwhile, architects are more likely to win work on small renovations than on larger, new projects.

Of the four geographic regions tracked by the AIA, only the Northeast was above 50, and only the commercial/industrial sector was above that mark in August.

The billings index is an indicator of construction spending nine to 12 months in the future. It is regularly cited by companies that sell into the sector as a reliable gauge of demand.

Most diversified industrial companies get at least some revenue from nonresidential construction, selling either machinery used in construction or the components of a building: elevators, electrical and lighting systems, heating and cooling and security networks, for example. (Reporting by Nick Zieminski; Editing by Steve Orlofsky)