NEW YORK (Reuters) - A leading indicator of U.S. nonresidential construction spending fell in June, suggesting the sector’s downturn has yet to hit bottom, an architects’ trade group said on Wednesday.
The Architecture Billings Index fell more than 5 points last month to a reading of 37.7, after a slight increase in the prior month, according to the American Institute of Architects.
The index has remained below 50, indicating contraction in demand for design services, since January 2008. Its lowest recent reading was 33.3 in January.
All four U.S. construction sectors tracked by the group, and all four geographic regions, remained below 50 in June.
A measure of inquiries for projects dipped to 53.8 from 55.2, the fourth straight month that inquiries have held at a similar level but have not led to higher billings, as more architecture firms bid for the same projects.
“It appears as though we may have not yet reached the bottom of this construction downturn,” AIA Chief Economist Kermit Baker said. “Architecture firms are struggling and concerned that construction market conditions will not even improve ... next year.”
Earlier this month, the architects’ trade group cut its 2009 and 2010 forecast for U.S. construction spending.
It predicts a 16-percent decline in construction spending this year, and another 12 percent decline in 2010. In January, the AIA had forecast an 11-percent drop in 2009, followed by a further 5 percent slide next year, but has revised its estimates, citing continued U.S. economic weakness, including steep job losses and tight credit conditions.
Nonresidential construction includes commercial and industrial facilities like hotels and office buildings, as well as schools, hospitals and other institutions. The AIA’s Billings Index, which began in 1995, is considered a measure of construction spending nine to 12 months in the future.
Companies that sell to construction markets include diversified manufacturer Honeywell International Inc (HON.N), lighting maker Acuity Brands Inc (AYI.N) and electrical components maker Thomas & Betts Corp TNB.N, as well as heating and cooling systems makers Ingersoll-Rand Co (IR.N) and Johnson Controls Inc (JCI.N).
Reporting by Nick Zieminski; Editing by Phil Berlowitz